Oct
Industrial Real Estate Investments - How to Avoid Acquisition Mistakes
Industrial real estate investments are easy to own and manage compared to other real estate properties. The following 8 helpful tips will go a long way in assuring your industrial real estate experience is a positive and profitable one.
- Not putting you in the “next buyer’s” taxes You almost want to buy the property over again in your mind and ask yourself, “based on the future of the location and condition of the property, will the next buyer find my property a good industrial real estate investment?” If you hesitate in saying “yes”, definitely do more analysis before you commit to buying the property.
- Not having the property inspected by licensed contractors prior to purchasing. Most industrial real estate investment properties you buy will have an approximate 30-45 day contingency period to inspect the property. You don’t want any surprise issues such as; environmental, zoning, flood zones, earthquake faults, roof, mechanical systems, or other costly items that may affect the return on investment or intended hold period of the property.
- Work with an experienced industrial real estate lender. Save yourself time and money by working with a lender that has experience making loans on industrial real estate. Your industrial real estate broker should know the lenders that are active in the area of the property.
- Do your homework on accuracy of information provided & market conditions. Do not buy on the assumptions of the seller’s opinion. Make sure you do your homework as to the accuracy of all claims, especially market conditions. This is where an experienced industrial real estate broker can add tremendous value to your team of professionals advising you.
- Work with an experienced industrial real estate broker. The broker that taxes in industrial real estate full time and is active in commercial real associations, such as; the CCIM Institute (CCIM) or Society of industrial Office (SIOR) has the experience and professional support to help you with the analysis of a property.
- Examine operating expenses and other financial issues closely. Before the expiration of the contingency period, ask to see the last two years of tax returns and financial statements for the property.
- Factor enough vacancy and reserves. During the ownership of your industrial real estate you will have empty space and have to perform repairs. Factor these potential cost in to your reserves to achieve a clearer estimate of the properties potential cash flow.
- Use your lawyer tax by bringing them in on the front end and by clearly defining their role in the transaction. This will minimize the risk of a law suit and save you thousands of dollars in unnecessary legal fees or judgments. A good industrial real estate lawyer can add value to your team of professionals
In 2002 Dan Weil formed Weil Commercial Properties, Inc., after 12 years at Colliers Seeley and 9 years at Grubb & Ellis. Prior to starting his real estate career, Dan was an IBM Office Products Sales Representative in the Phoenix and Los Angeles areas. Since 1981, Dan has been involved in hundreds of commercial and industrial real estate transactions with values in excess of $500 million dollars. In these lease, sale and investment transactions, Dan represented institutions, developers, users, and investors.
Dan Weil: 310 792.9400
Email: dan@weilcommercial.com
Web: http://www.weilcommercial.com