How to Invest in Government Leased Real Estate
Real estate can be a profitable investment provided you make wise choices at the outset when selecting property to purchase. There is a wide range of different types of investment real estate available on the market. In the end, you need to select real estate that is both profitable and fits well into your overall investment portfolio. For example, owning residential rental property can provide a decent cash return but is time-consuming to oversee and manage. Such an investment is not a good fit for all investors. One option to consider is investing in government-leased real estate.
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Things You'll Need
- Appraisal
- Property inspections
- Existing lease agreement with governmental agency
- Rent payment records
- Contract for sale
- Deed
Instructions
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Use a comprehensive set of resources to identify government-leased real estate that is on the market for sale. These resources include newspaper advertisements and local real estate classified sites in operation on the Internet. Consider engaging the services of a professional commercial real estate broker as well.
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2
Engage professionals to inspect the commercial real estate leased to a government agency on the market for sale. You need to have plumbing, electrical and structural inspections.
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Hire an appraiser to provide an independent valuation of the property. Do not rely on an appraisal provided by the seller.
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Examine the rent stream on the government-leased real estate. Confirm that rental payments are made consistently and in a timely manner.
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Review the outstanding lease with the governmental agency or agencies occupying the premises. One of the benefits of purchasing government-leased real estate is that a tenant is locked in through a rental agreement for a more extended period of time.
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Make an offer on the property.
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Enter into a contract for sale when there is an agreement on a sales price.
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Obtain a mortgage loan to purchase the commercial property (if you do not already have a loan commitment in place).
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Close on the contract once the title search and other technical matters associated with selling and transferring ownership of the commercial real estate is completed.
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Tips & Warnings
There are two primary benefits of trying to find government-leased real estate for your investment portfolio. First, government leases tend to be longer than rental agreements with private sector enterprises. Second, government tenants nearly always pay rent in a timely manner.
Government-leased real estate does not often come on the market for sale. Therefore, you need to be prepared to act swiftly to finalize a contract for sale. With this in mind, a major step to take to speed up the process is obtaining a mortgage loan commitment before you begin the search for this type of commercial real estate.
