Hidden Treasures In Commercial Deals

There is a saying that you will get the good along with a bad. Its always critical to have a complete understanding of a commercial property before buying it. You should be aware of the market rents for your area and have reports on the vacancy rates.

Whenever you lease a commercial property, you will have to pay not only for the space you occupy but also for the common areas which you use. These fees are referred as "Common Area Maintenance (CAM)" fees and in non-industrial spaces these are referred as " Load Factor" fees. These fees can be paid monthly, quarterly or even annually.

Take some time to review the guidelines for operating the property and you can find some hidden treasures in commercial deals. Lets discuss about some of them.

Land: In some deals you might get additional land which will not be counted on the deal. These land can incur more profits for you and hence lookout for extra land when you make deals.




Abstract the lease: Take more time to have a look at the properties and meet the landlords to know if they have the idea of the current market rates to be billed for the tenants. If they are not aware of it, this could be a hidden treasure and you can make use of it.




Under billed CAM: You need to have a very good knowledge of how the CAM is calculated. The owners might not bill correctly for what the lease specifies. You should pay close attention to water/sewer bills and real estate taxes. CAM adjustments are usually done after the calendar year. These adjustments will be implemented in feb or march. This adjustment can be an advantage or disadvantage at times.




CAM: If it's and existing lease, modify it and add some percentage on top of the actual expense you incurred for the repairs. You can even add some extra cost on top of it as administrative fees. Don't be greedy and frighten your tenants with high CAM fees.




Size: Size of the property really matters in real estate. Try to know the exact size of the property because in reality the size of the property might be larger or smaller.

Apart from these there are lot of hidden treasures in commercial deals. Try to know the various other treasures and this could result in a huge profit for you.

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