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Getting Started in Commercial Real Estate

The first step when planning to purchase commercial real estate in Los Angeles is to write down the type of property you are looking for. Will it be used as your place of business, as an investment property, or for something else? If investing, are you willing to put in the work to be a landlord? If you are looking for a business property, do you need to buy, or could you lease instead? Do you already have a location in mind? What is your status regarding cash, financing, and your ability to make a down payment?

To get your property search underway get in touch with Boulevard Medical Properties today.

Accept the Learning Curve

It will be easier for you to work with people in commercial real estate in Los Angeles if you learn some of the industry lingo.

  • Loan-To-Value (LTV): A ratio of how much money you’re asking from a lender vs. the total value of what you want to purchase.
  • Debt Service Coverage Ratio (DSC): Operating income over total debt service. Basically, how much of the debt you’ll be able to cover each year with income.
  • Capitalization Rate (Cap Rate): Income of the property divided by the total value of the property.
  • Cash on Cash: Annual income over how much you actually invested. The amount invested could be just the amount your down payment was.
  • Vacancy Rate: Percentage of properties that are vacant in a time period in a given area.
  • Ad Valorem: A tax based on the assessed value of a piece of property.

Consider a Variety of Properties before Making a Choice

When visiting the different properties, make note of what you like and dislike about each of them. Location can strongly influence a property’s value – as well as how fast it sells – and its importance cannot be emphasized enough.

What you’re looking for is a good “fit” on as many fronts as possible. You want a property in the right place, for the right price, that serves that right purpose.

Hire the Experts

Buying commercial real estate in Los Angeles can be complex. Depending on the type of property you purchase, you may need to hire an

  • Accountant
  • Commercial real estate lawyer
  • Commercial realtor
  • Mortgage broker
  • Tax expert
  • Notary
  • Appraiser
  • Engineer
  • Environmental specialist

There’s plenty you can do on your own, but some jobs just require expert knowledge to be done properly.

Figure out Financing

Most people need at least some financing help to purchase a property. You can use

  • Banks
  • credit unions
  • home mortgage companies
  • Also, think about what kind of credit you have and ask what interest rate the companies can give you
    If these traditional financing methods don’t work for you, find out if the seller can help. Read up on things like
  • seller carry-back
  • subject-to
  • second mortgages
  • lease options

Make an Offer!

When you are ready to make an offer, consult with your lawyer and tell him or her about your plans. Your lawyer will have you sign a Letter of Intent (LOI) about the property and all the contracts involved. The LOI is NOT binding.

Never sign anything without your lawyer reviewing it first. Have your lawyer explain what all written agreements mean to you in plain English (or hire an interpreter to explain in the language with which you are most comfortable.)

Due Diligence and Escrow

This is where you get down to the details.

  • You will order an ALTA (American Land Title Association) survey, which can be used as part of the due diligence.
  • You and the seller will hire an escrow officer to be the neutral third party in the sale.
  • The final closing documents must be produced.
  • You have the right to a final inspection of the property. If something negative comes up and you want to cancel the purchase, you have a right to tell the escrow officer to deny the transfer of funds.

If you are looking for medical and dental office space at prime locations in Los Angeles, the search is over! Boulevard Medical Properties has the space for you. From practices like USC Fertility and Perinatal, to State of the Art Imaging Centers and Community Clinics, Boulevard buildings are home to a wide variety of medical professionals – and we want to welcome you to our community! Contact Us Today to set up an Appointment!

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