One of the principles to acquiring commercial property for sale involves comparing multiple, similar properties prior to making a decision. Taking that extra step will help you find and compare the right fit for your investment portfolio. If you are currently seeking a new investment vehicle, or if you already own some commercial real estate, a review of some fundamentals will help ensure you get the highest ROI possible.
- Investigate at least three similar properties or more, and delay signing any contracts until you have a full understanding of the overall expense picture, which includes maintenance.
- Use a spreadsheet to create a comparables analysis. Doing so will give you an objective method of analyzing the different properties in addition to having the capability to create charts and graphics for quick illustrative review of the fundamental numbers.
- In addition, obtain a pro forma contract to contrast to the other contracts and include the differences in the spreadsheet. This should include basics such as square footage, price per square foot, incremental expenses, property taxes, vacancy rates, leases, and maintenance.
Doing this has three primary benefits. You will make a more objective decision. You will have far greater negotiating leverage with the property owner if you are seriously considering other properties, and you avoid emotional attachment that can cloud your judgment.
Since many leased properties are different in price and size, you may want to calculate the total annual rent and divide by 12 to get the base monthly rent. The works as a quick tool rather than a detailed comparison, but it can come in handy prior to deciding on which property to conduct due diligence.
By comparing your preferences and the numbers, you should be able to eliminate the properties least likely to bolster your portfolio, thereby making the list of potential properties manageable. Then utilizing comparison software will be more streamlined as well.
If you are considering investing in commercial property for sale, our agents at Menlo CRE have the experience and knowledge to help you find the perfect fit for your portfolio. Contact us today at 480-659-1777.