A vacant commercial property is a significant frustration for an investor. They are loosing out on rents and outgoings recovery. Over time that can all add up to a large amount of money and financial discomfort. Look at vacancies for the opportunities that they are for you in leasing brokerage.
The income for a commercial Investment property will have a direct impact on the potential price that sale. On that basis the income needs to be fully understood and investigated as part of the preparation for listing.
Any agent or broker listing an Investment property should take the time to review everything that could have an impact on current and future property income. Look for the strengths and weaknesses that apply to the property income stream and the cash flow for the asset.
Strengths and Weaknesses
The buyers for any Investment property will always undertake a due diligence on the listing and the location; weaknesses will be found so make sure you understand where those weaknesses are and how to address them. They will be looking for things that will have an impact on property performance over time. Some problems in cash flow will have a direct influence on a negotiation for property purchase.
Here are some ideas to help you review income performance for the assets that you might take to the market for sale as an investment:
The gross income for the asset in today’s terms will always be the starting point of an income assessment. Look at the actual volume of rental created from the existing leases and the tenants in occupancy. Understand the elements of cash flow that make up the income stream. Those elements will usually include rental, rental by type, outgoings, special licensed areas in the property, casual rentals, and permanent tenants.
Look at the cash flow per month over a period of time. Understand the gross rental achieved each month over the last 12 months. There will be patterns to the income stream driven by the tenants in occupancy. If there are vacancy factors in the property to deal with, then that will have a reflection in the collective rental. Review the number of vacancies and the negative impact that those vacancies have on the cash flow for the asset.
Understand the vacancy threat that maybe upcoming in the property tenancy mix. Some tenants will be leaving or relocating within the property, and on that basis you should develop a full understanding of how those vacancies will be handled. Some vacancies will be harder to lease than others.
Property expenditure on a monthly basis will reduce the gross income to a net income. The age of the asset will have an impact on property expenditure and maintenance. Compare the expenditure in the property to other similar properties in the same location. Look at the averages, and in that way understand how your asset compares.
Some of the rentals in the property would have been determined on a market rental basis. Compare that market rental to other properties of similar type in the same location. Is your property correctly rented, or under rented?
From the examples provided you can see that there are many different elements of income to look into and review. Some of those income factors can be improved over time, and that’s where the skills of a leasing and or property management specialist are quite valuable.
As an agent or broker, develop a comprehensive investigation process applying to the analysis of the income stream in any investment performance. An income checklist will be very useful as part of that process.
Some simple things make all the difference in commercial real estate brokerage. If you are struggling with new business and or listings, then read on. Set some targets with your results achieved. Most agents and brokers can’t or don’t get these basic things under control; that is then a large opportunity for others in […]
There are certain things that produce better results than ‘average’ in commercial real estate brokerage over time. A steady brokerage strategy and consistent efforts personally will generally pull in contacts, listings, leads and opportunities. If you have been trying to grow your business base and client list, have a listen to this commercial real […]
When you are about to lease and or manage a shopping centre, there are things to understand and get under control. All facts require full investigation and documentation. In saying that, an active tenant mix and customer base in a large shopping centre can complicate and make more urgent those investigations. So where can you […]
When it comes to winning sales listings in commercial real estate today, the best way to do so is from a base of facts. Those facts are then relevant and specific solutions that you know are aligned to the client’s property situation and challenge. They should be specifically matched to the location, the client and […]
In commercial real estate sales and leasing, there are client categories that should be concentrated on. In most towns or cities there are some good people to connect with as prospects and future clients. This chart will help you understand the four segments of client activity and the matters to review in each case.