Learning Services Contracts In Commercial Property Investing

Understanding service contracts before investing in commercial real estate means starting with service contracts; pretty much all Dallas real estate brokers can assist you with this process, briefly explained below.

Review carefully any and all service contracts in effect to make sure that they are cancelable with 30 or 60 days’ notice.  Make special note of any that is self-renewing for long terms such as one year or longer.  If you come across any of these types of agreements make sure that the seller understands that he will be responsible for any costs incurred for early termination or be prepared to live with them for the duration of the remaining term.

Next, you need to address certain issues that you believe will impact the building from a physical, material or financial perspective that you discover with the third party investigative reports.  You want to determine early on which items are going to be “deal breakers” and which ones you can negotiate on.  Either way it’s important to figure them out as soon as possible; if possible, bring them up while negotiating the purchase and sale agreement (“PSA”) and make sure that the solutions to any issues negotiated are incorporated into the PSA.

If that isn’t possible or issues or problems are discovered later in the due diligence process, make sure you’re aware of the costs involved and how it will impact the financial analysis and be prepared to confront the seller properly “armed” with the right information; estimates for repair or replacement, etc., as applicable, so you can legitimately ask for a discount. Finally, make sure that all permits required for the operation of the property i.e. elevators (annual and five year load test).  Taking these steps will assure smoother investment transactions which Dallas real estate brokerages could assist with if needed.

Atlanta Properties Facing Tax Appeals

Most property management firms will have prepared an operating budget for the current year, and later in the calendar year, next year’s operating budget.  This budget will factor in any upcoming maintenance and needed repairs to the real estate.  Always ask for the current year’s operating budget and, if they have it, next year’s budget as well.  This will alert you to any expenditures planned for repairs, replacements, maintenance issues, code compliance issues, upgrades, refurbishment plans, and tenant improvement projects coming up.  Unbeknownst to these property investors, Atlanta real estate brokers can assist with interventions because of the reason short to follow.

Some managers are reluctant to hand it over and may give some excuse for not being able to.  If they say they can’t, ask if there is anything that the ownership is trying to hide from you.  Tell them it is important for you to review it.  There is much to be learned from it and tells you a lot about what’s happening with the building.

Property Tax Appeals

In many states the land taxation process allows for an appeal if the property’s owner believes the tax assessment to be excessive or unfair.  Since property taxes are such a large part of the operating expenses, it makes perfect sense to challenge the tax assessor’s property tax bill so that you know you are getting the lowest possible assessment allowed.  This can be done primarily through third party tax consultants or even Atlanta real estate broker ages who specialize in assisting individuals with property tax appeals.  

These realtors have the local expertise in property values and processes in getting your tax bill reduced.  This is generally done on a percentage of the savings or negotiated fee basis.  All in all, it’s a worthwhile fee paid to save a good chunk of money.  It’s too important to overlook, although some property owners do.