We’ve talked before about the importance of doing your due diligence in Alaska commercial real estate, from building your local network and team of experts to identifying risk. Another important component of being a smart real estate investor is covering all of your financial bases and you can count on Northern Edge Realty to walk you through it! Below are three important ways to do your financial due diligence when investing in Alaska commercial real estate:
Get the numbers
Before you can commit to investing in Alaska commercial real estate, it’s important to compile and consider a particular list of numbers. Gather a statement of income and operating expenses, listing figures like gross potential income and gross rental income. Get the real figures from historical data from the past three years—or no less than one year—to make a realistic prediction in your potential income as well as potential vacancy loss. If available, try to look over the seller’s tax return for the most accurate depiction of all expenses and income.
Looking over existing leases is one of the best ways to estimate income for a property. Look over every detail and discrepancy. You should also take into account rent rolls for a potential income property; these list a tenant’s name, rent amount, any past rent owed, and lease expiration date. These numbers will help you predict the first year of your income from the property.
Get existing loan documents
If you will be assuming a loan for the property, be sure to get the existing loan document in hand. As a new owner taking on a property with a loan, you should know what the previous owner owes and the terms of the loan. A good document to look over in this regard is the title report, as this can show information on modified or extended loans, suggesting any financial stress associated with the property and perhaps a motivating factor for selling.
Ready to get started on investing in local commercial real estate? Give Northern Edge Realty a call today for commercial real estate opportunities in Anchorage AK and the surrounding areas! We can work together toward your commercial real estate goals!