In many ways, commercial real estate investments open up more profit potential than your typical residential properties. Being able to lease your property out to businesses – sometimes multiple companies using the same property – means there’s a constant stream of income every month.
As with all things related to real estate investments, profits are never guaranteed; especially if you’re not optimizing your investment. This post will give you some tips to do that, so you can make as much money as possible from commercial real estate!
Add Value To Your Investments
Enhancing commercial properties makes them more attractive to wealthier clients. Rather than offering office space to a small business, you can lease something bigger and better to more established companies with more money.
It revolves around identifying the main areas of improvement – what can you do to make the property more valuable? A good place to start is with energy efficiency improvements. Install solar panels, more eco-friendly lighting, or advanced HVAC systems throughout the building. This drags down the operating costs for potential tenants, meaning you can ask for a higher rental price.
Focus on improving the infrastructure by introducing new tech advancements as well. Think about things like biometric security on the doors – it immediately makes the commercial space more viable for high-end clients as they pay for a more secure space.
Optimize Your Leases
Lease optimization is a simple concept: secure long-term leases so your commercial real estate investments are constantly occupied. Don’t make the error of welcoming tenants on short-term leases; they may stick around for 6 months before going away. The more time your properties stay vacated, the more money you’ll lose.
Invest in good leasing software to keep track of every lease as well. This allows you to move in ahead of time and negotiate new long-term leases with existing tenants. If they can’t commit to the lease you’re offering, you have time to find someone who will. When the old tenant leaves, the new lease starts immediately with no gap in between. Good lease optimization ensures your buildings are always full and the money is flowing.
Adopt Effective Property Management
This goes hand in hand with lease optimization as learning how to properly manage your income-producing real estate helps you secure long-term tenants. A client is likely to take out another lease if you’ve managed their property well and they have a good rapport with you. On the flip side, tenants will find other commercial properties if their space is poorly managed, leaving you with a vacant building again.
Excellent property management also adds value to the property! You can step up your rental charges – and companies will pay these higher prices – when the property is well-managed. It makes running a business less stressful when there’s great property management in place. Companies recognize this and will be more inclined to pay more for your space if you’ve got a good reputation in this regard.
Optimizing profits from commercial real estate is largely about ensuring you continuously get money from all of your investments. To do this, you need occupied properties with hardly any vacant periods. You also need to be earning enough money from the leases – which is where adding value comes in. Use the free guidance in this article to improve how you approach commercial real estate and reach your true profit potential.
