Make money with commercial property

In my last post, I promised that I’d teach you some useful negotiation tactics. Because if you want to make money with commercial property, you have to learn how to negotiate.

Sure, finding the right property may give you positive cash flow. But you’re not going to maximise it unless you know how to negotiate a good deal. What’s more, it isn’t unheard-of for this skill to save you tens of thousands of dollars.

Although you’ll likely be paying a lot for a commercial property, you shouldn’t just throw money around. You need to maximise your returns. This means not paying too much to get in the door.

Before you start, know that every deal is different. There’s no foolproof negotiation strategy that wins every time. However, there are a few basic rules that apply in most cases.

Let’s have a look.

  1. Focus on the Numbers

Knowing your numbers is vital in any negotiation. Unless you’re 100% clear about how much you need to pay and how much you can expect to get in return, hold off on the negotiation. Or else you’re likely to overpay for the property.

Among other things, you need to look at the rental income, cap rates, and costs. If you’re not well-prepared, the seller will have the upper hand

To avoid this, make sure to have a maximum amount you’re willing to pay. Set an upper limit to your offer and stand your ground.

  1. Create a Win-Win Scenario

Many people believe that negotiation is a zero-sum game. Either you win or the seller does. And if the seller wins, you lose.

But that’s not how it works. Forget about those aggressive negotiators you might have come across in real life or on television. Your aim should be to create a win-win situation. And this happens to be possible in almost all deals.

It’s worth mentioning here that the price shouldn’t be the only point of negotiation. There are a number of terms you can negotiate to create an outcome that’s satisfactory to both sides.

For this reason, you must know the market and the specific property inside out. Then you’ll know which terms to negotiate and which to leave as they are.

  1. Don’t Get (Too) Emotional

In a negotiation, emotions can cloud your judgment. They can prompt you to agree to terms that you’ll regret later down the line. For this reason, you must always remain calm and think rationally.

That’s not to say this will always be easy, especially near the end of a negotiation. You might feel compelled to offer more just to get it over with. However, this is precisely when you must stand your ground.

With that said, don’t go to the extreme of hiding your interest in the property. We’re not talking about a poker game here, so that’s not a particularly good approach.

Feel free to show your interest in the property. You’ll come across as a serious buyer and make the seller or broker more open to negotiation.

Again, focus on the numbers and leave emotions out of it. At the same time, though, don’t be afraid to show that you think the property is right for you.

Of course, there’s a lot more to learn about negotiating a good deal.

Sign up for my webinar to learn more.