When it comes to buying commercial real estate, each real estate investor has developed their own set of criteria. However, regardless of your situation, there are certain factors you should keep in mind throughout the process. Here are our top key factors to consider before buying commercial property.
Best Way to Buy Commercial Property
Think About the Future of Your Business
Unlike residential real estate, commercial properties require you to consider future growth possibilities. This involves your potential borrowing requirements (commercial real estate loans). Taking into account not simply what you require right now, but also what you may need in the future to establish a foundation for success.
Location – Where to Buy Commercial Real Estate
The top hurdle for buying commercial property is finding a good location. Look for a location that is convenient for consumers and accessible but not too far from suppliers. If you do a lot of shipping or purchase large volumes of items, consider locating near railroads, highways, and cargo channels.
The Condition of the Property
Commercial real estate investors should always carefully examine the building. What kind of condition is the property in? Before making your commercial real estate purchase, examine the building’s general wear and tear. Also, check for any environmental concerns that may arise. For example, if previous owners neglected to dispose of chemicals properly or otherwise polluted the site, you could be responsible for costly clean-up.
Read Your Lease Agreement Very Carefully
When it comes to commercial property buying you must read everything extremely carefully. For instance, if you’re looking to buy commercial property and are in a minor structure, you don’t want to be stuck in a location that won’t support it. New and developing firms may face unforeseen demands, including the need to expand beyond what their facilities may support.
Market Value – What Type of Commercial Property is Most Profitable?
Many businesses buy a property with the intent of selling it later, but end up getting stuck with it when the value doesn’t increase as they predicted it would. Avoid this pitfall entirely by having a market analysis done before you buy the land. That way, you know the market value of your property going in and can make decisions accordingly. You may not end up with the cheapest commercial space this way, but accounting for the needs of future buyers can make it a worthwhile investment.
Stick to Your List
When you’re thinking about how to buy commercial property, you must prepare for unexpected compromises to arise. But don’t lose sight of your primary requirements and desires. Keep a running list of the elements and details that matter most to you. If you find yourself intreseted in a property mainly because it would be cheaper than its alternatives, you could be compromising at the expense of your vision and long term happiness with the investment.
Bring in a Contractor
You’ll have to deal with inspections, codes, and necessary modifications after you buy a commercial building. Be one step ahead by bringing in a contractor before you buy to perform an inspection. Getting caught up in costly unexpected renovation expenses might put your company out of business.
Remember to Consider Zoning
Buying a space is an exciting time. It is easy to overlook the details of the surrounding area. That’s why it’s important to consider zoning. Otherwise, you could find that you will have extra hoops to jump through before you can start to operate your business.
Neighbors
Like residential properties, neighbors are important when it comes to making a big real estate investment. How could the value of your property affect adjacent properties? A restaurant or retail development that relies on customer visits would want to avoid locating near a factory that emits irritable smells, even if the suitable zoning is available and the space is inexpensive. Good neighbors with loyal consumers, on the other hand, may help drive client traffic to your business. If they aren’t bringing in business, they might become a hindrance to your success. At the same time, you should make certain that the products and services offered are not duplicated by others. Nobody wants to deal with competition at home.
Choose an Experienced Real Estate Agent
If you’re investing in commercial real estate, it’s critical that you select the best space for your needs. You’ll want to find a real estate agent with extensive knowledge of the local market and who will support you through the process.
Negotiate – Investment Strategy for Buying Commercial Property
When you’ve found the perfect commercial real estate deal, you’re more likely to accept the first purchase price. You want to ensure that the area is yours and that you aren’t missing out on your ideal commercial property. As a general rule, it’s smart to haggle before buying. You should never agree to a first offer. It may appear difficult at the time but it will make all the difference in the long run and prove to be a good investment.
FAQs on Buying Commercial Real Estate
What type of Commercial Property is Most Profitable?
When it comes to making the most profit out of your commercial real estate investment it’s important to note that a business property is not the only way to increase your ROI. Properties that are capable of bringing in the highest ROI are typically depend on the number of tenants. These commercial real estate properties can include multifamily projects, student housing, office space, self storage facilities, and mixed use buildings.This is why it can be a great idea to start buying commercial property to rent out.
Is Investing in Commercial Property a Good Idea?
The short answer is yes. Buying commercial property is a smart investment for those who know what to expect and have considered the above factors before buying. The potential income is what draws so many real estate investors (or buyers new to the real estate game) to invest in commercial real estate. When compared to residential properties, commercial real estate is known to have a higher return on investment.
If you are looking for more advice about purchasing commercial real estate contact us today!
