Real estate is not all the same, and the principles of common real estate rarely apply to commercial real estate. When you’re just getting your feet wet in commercial real estate, it helps to have an understanding of the basics. This article will provide an in-depth look at the different principles you should consider when making a commercial property investment.

A letter of intent is always recommended in larger commercial real estate transactions. What a letter of intent does is allow the two parties to agree or work out the details of the general agreement. Before signing contracts or laying the groundwork for a contract, a letter of intent is usually written. It is important to note that a letter of intent is considered non-binding. If you ever have to sign a letter of intent, make sure it’s not binding before you sign anything.

Leasable square footage is most commonly defined as the combination of usable square footage and a portion of the common area of ​​a building. There is approximately a 10% to 15% difference between the usable and rentable square footage of a property. The rentable square meters can be calculated using the formula: useful square meters plus a certain percentage of the common areas of the building. Keep these different types of square footage in mind when buying, selling, or renting commercial property.

Leasing commercial buildings involves a monthly fee called common area maintenance or CAM for short. When you rent commercial space, you are paying more than the space that your business occupies. These CAM fees are often charged monthly, quarterly, or annually. In some cases, CAM fees are charged when an area of ​​the commercial building needs remodeling. When you are renting a space, always keep in mind that CAM fees are rarely a fixed rate and can increase depending on several variables.

Tenant improvements are defined as improvements that a tenant makes to a given commercial property. These improvements can range from wall and floor coverings to air conditioning and fire protection. The guidelines and rules for this type of accommodation are usually outlined in a given lease. Always make sure what types of changes are allowed in a contract before signing on the dotted line. It is imperative that you be able to make the changes necessary for your business in a commercial setting.

A commercial real estate broker has many duties and if you are one or need to hire one, it is imperative that you know what these duties are. A commercial agent must be able to provide valid financial and analytical data related to a given property in question. It is also vital to note that selling or leasing commercial property takes much longer than leasing or buying residential property.

Buying and selling commercial property is a good way to generate income. However, whichever side of the spectrum you are on, you really need to be able to meet your needs and those of your consumers. This article discussed some of the basic principles involved in making the right decisions when it comes to commercial real estate. Use what you have learned today for optimal success!