Commercial Real Estate On Long Beach Island
What is a commercial property?
A commercial property is any property that resides in a commercial zone and is used for business/income-generating purposes. These zones are reserved for spaces used for restaurants, industrial uses, office space, retail, flex, or mixed-use.
How long is a typical lease term?
Usually, commercial tenants sign leases for 2-5 years+ on LBI, offering a potentially more stable rental income than single-family. The key is finding a tenant that understands how quiet the winters on island are since Long Beach Island is a summer vacation destination. As a commercial space owner it is important to understand the business you are leasing too, if it can last on the island, and if it is viable for your property. Those who do this realize less changeover tenants resulting in overall less vacancy and higher income. Those that are prepared and plan for this will last long term and prosper!
Is the process for purchasing a commercial property different than residential?
Typically, the process of purchasing a commercial property is more complex and can often take longer when compared to residential properties. The purchase of a commercial property involves more tedious steps before and during the transaction. Some aspects that lead to a longer closing process can be attributed to intense due diligence, securing the commercial loan (different than a typical mortgage), length of the contract, continued negotiations, the use of more professionals (appraisers, brokers, attorneys, planners, etc.), the number of parties involved in the transaction, and more.
What is the typical commercial space for sale on island?
Many of the island's commercial real estate for sale typically tends to be either a retail, restaurant, or office space that also has a living area/unit on the second floor. These types of spaces are often referred to as mixed-use properties since it offers a “mix” of both a commercial and residential property.
What is the best type of commercial property to buy on LBI?
The best type of commercial property to buy on Long Beach Island is the one that makes the most sense for you! Real estate can be subjective due to an investor's own personal goals and wants. From a sheer income point of view, finding a property that is in a favorable location, is visible, in good condition, and offers more than one opportunity to find a tenant (mixed-use or multi-space building), could prove to be an excellent investment.
How can I search commercial real estate on LBI?
Finding the right commercial real estate property on Long Beach Island is a straightforward and rewarding process—when you have the right agent by your side! With my extensive experience in the LBI market, combined with the unique perspective of someone who grew up on the island, I bring a deep understanding of the area’s opportunities and challenges.
In addition to my local expertise and experience, I hold a degree in Business with a concentration in Commercial Real Estate, giving me the specialized knowledge to help you navigate the complexities of commercial transactions. Whether you’re looking for a retail space, a restaurant location, a mixed-use property, or another type of investment, I’m here to guide you every step of the way.
Commercial Real Estate For Sale
Take a minute to search the island for Commercial real estate currently for sale on LBI.
Commercial Real Estate At A Glance
Typically, the process of purchasing a commercial property is more complex and can often take longer when compared to residential properties. The purchase of a commercial property involves more tedious steps before and during the transaction. Some aspects that lead to a longer closing process can be attributed to intense due diligence, securing the commercial loan (different than a typical mortgage), length of the contract, continued negotiations, the use of more professionals (appraisers, brokers, attorneys, planners, etc.), the number of parties involved in the transaction, and more.
Due diligence: The process of finding the correct property in a commercial transaction is much more involved than in a residential purchase. During this period, a potential buyer will be diving into property records, past performance, cap rates (a figure to help measure return), market competition, the local area, population, property condition, possible liens, and more!
Inspection: The property inspection process for a commercial space can be much more involved and can take several weeks depending on the property. This part of the due diligence period determines feasibility of the site, review of title and survey, structural issues if any, building engineering, equipment inspections, and more.
Securing the loan: Typically when purchasing a commercial property you will be required to obtain a commercial real estate loan. This type of loan differs from a mortgage in multiple ways, most notably requiring a higher interest rate and sometimes taking longer to secure. It can be noted that there may be some scenarios on island where you can purchase a commercially zoned property with a mortgage.
Complexity: In short, the contract for a commercial property is more complex versus a residential sale, often with more sections and provisions. Commercial deals typically involve more diligence, computations, negotiation, and time to conduct the proper research and contract adjustments/amendments.
Professionals: In certain cases commercial deals involve more professionals such as; attorneys, appraisers, brokers, planners, etc.
Number of parties: Often commercial buyers do not act alone and either have investors, partners, or family that is involved. The addition of other partners, as you can imagine, could lengthen the process.
Tenants: Many times during the sale of a commercial property the current owner has a tenant in the property. The new owner will need to honor the lease until the end of the term (unless there is a legal mutual agreement between the new owner and current tenant). The old owner will need to transfer all details, future payments, and other relevant info to the new owner.
Miscellaneous: There are many other reasons a commercial deal could take longer when compared to residential. Some other common situations would be: longer contingency periods, usage concerns with the town, construction approvals, and other certain negotiations.
Luckily, many of the properties on the island are simple in terms of size, building style, allowed use, and price. As a result, the process on LBI could move along a bit faster when compared to a typical commercial sale.
Purchasing an Investment Property
Many individuals purchase real estate on Long Beach Island not only as a first or second home, but also as a business/rental opportunity. Contact me today to learn more about investment properties on LBI and whether it is the right decision for you!
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The most common type of investment property on LBI is used for seasonal/year-round rentals. These properties often can be single-family, multi-family, condos, or mixed-use properties. The island is known for its steadily growing sales & rental market boasting a large boom in demand and price over the past 10+ years. To put this into perspective, the average weekly rate for a rental property in peak season (June-August) is roughly $6,000. This number has drastically increased over the years, displaying an average rent increase of about 45%-50% since 2018, adding to the already strong and profitable LBI rental market.
At the same time, home prices have increased over the last decade tremendously. While this may seem daunting when purchasing a property, it is important to understand your property’s value will appreciate over the years building equity. For example, the average sales price for homes sold on island for the year of 2016 was $899,519 while in 2022 it was $1,679,641. This is an increase of almost 87% in just 6 years! These numbers reflect only the average sales price of residential homes sold in 2016 and 2022.
Much goes into the due diligence and process of finding the right investment property for you. Reach out to me to learn more or start your search today!
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Commercial Use Properties on LBI can be quite lucrative as a landlord or property owner. The island offers many opportunities to purchase a commercially zoned property in order to establish a business or fill the property with a tenant. Usually, commercial tenants sign leases for 3-5 years on LBI, offering a potentially more stable rental income than single-family. When valuing a commercial property it is important to properly engage in thorough due diligence of the property history, past earnings, annual debt service, building operation costs, “cap rates” or return, and more. As your Realtor I will help guide you through this process. Reach out today to learn more about this!
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Mixed-use properties are relatively common on LBI. Many of the commercial buildings for sale also include a bonus residential space for you to either occupy or rent-out to a tenant. Properties such as these can offer a high-rate, long term tenant in the commercial portion of the property while simultaneously allowing for a long term winter or peak-rate summer rental.
Why Buy on LBI?
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Buyer Information
Learn important information pertaining to a buyer in this real estate market. Learn about the process, typical closing costs, mortgage info, insurance info, local recommended professionals, and more!
Important Real Estate Links
In need of valuable resources to navigate the real estate world effectively? Look no further. My collection of crucial real estate links is curated to provide you with the essential tools and information necessary for your property endeavors. Ready to embark on your real estate journey? Explore my directory of links today and take the first step towards achieving your real estate goals. Your success story begins here.