5 Things to Consider When Buying Commercial Property

Jun 24, 2022 | 0 comments

The decision of buying a commercial property is like entering into a new venture; you can do the research & market study but you never know what the future holds. All the parties involved, buyers, sellers, and agents are prone to or exposed to the risk of demand & price movements. At the same time, when the prices go up, all the parties reap the benefits that could be substantial.

When looking to purchase a property for commercial use, it’s important to consider all the potential implications and ramifications that come with the decision.

What is the right type of property for your business? What are the long-term goals for the building? How does it fit into your company’s overall strategy? And so on…

5 Essential Things you Need to Consider

Beyond the basics of square footage, the number of bathrooms, and parking availability, there are a few other things you’ll want to take into account before signing on the dotted line.

Most importantly, ensure to evaluate the risks involved before buying commercial real estate. Before deciding to buy commercial real estate, it is critical to evaluate various risks involved. Don’t dip yourself into a situation, yet you could reap a better result by leasing or renting the same property in a few years. Study each risk carefully along with available mitigates, and don’t ignore any thinking it might never affect your business or is insignificant. 

Here are five important factors to consider before you purchase a commercial property:

1. Location

The commercial property must be located in a favorable area where your business can flourish. With the high cost of leasing or renting a space, you’ll want to know it’s in a good neighborhood and will be accessible to suppliers, clients, and employees for years to come. If not, you may have wasted your time and money.

Where you buy real estate is extremely important, for many reasons. The land that you are about to buy should be adjacent to and near to an area that is already developed and populated. The location should be safe, quiet, and clean. It should be developed by means of the best practices of town planning and the latest technologies of architecture. It is better to buy land in a place that is on the way to development rather than buying in a developed area that is all buildings.

2. Research the Market

A little research goes a long way. Before buying real estate, research the market using information from local MLS listings and other sources that are available on the internet. Get a sense of current pricing trends and what’s currently available in the area.

Your research should include information about the property you are going to purchase, what its components are, and who might be interested in it. You need to know who is in the market for a certain type of property, and where they are. You must have a clear understanding of the location and its surroundings.

3. Budget

All the parties involved, buyers, sellers, and agents are prone to or exposed to the risk of demand & price movements. At the same time, when the prices go up, all the parties reap the benefits that could be substantial.

Buyers need to decide how much they are willing to spend on buying real estate before they begin their search. They will want to determine their budget as it relates to monthly expenses such as mortgage payments, insurance costs, and taxes.

You’ll need to determine how much you can afford to spend as well as what you’re willing or able to put down as a down payment. Some programs allow for 100% financing in which case you may only need to put down 10%. Determine what you can afford to spend on the down payment and how much money you are willing to put down.

4. Get a Commercial Real Estate Professional

When buying commercial real estate, it’s important that you rely highly on professionals who have experience with the specific property you plan to buy. It is important that you get a professional who has experience with the type of property you want to buy, and that they know how to assess its value and how it will be utilized.

You’ll need to get a commercial real estate professional to do a thorough pre-purchase due diligence (PDD) on the property you are interested in. The PDD is critical because it will give you information on the property’s condition that you won’t be able to find out on your own.

A real estate professional will help you throughout the whole process of buying and securing a loan. You will have to pay a commission or a fee to the agents for their work, but it is a small amount and well worth it.

The more information you can give them, the better your chances are of finding the property which brings you the best ROI (return on investment). When it comes to buying a commercial property, there is no room for errors.

5. Know what you want

It’s important to be clear and specific about what it is you are looking for in a property. It’s important to know your needs, desires, and budget before starting your search. An agent can help you with this step by showing you numerous properties that fit within your standards.

Prior to investing in commercial real estate, you should determine why you want to buy this property. There are numerous reasons why it can be a good investment for you. It can be a good investment if it is a rental property because you can collect rent after paying taxes and expenses. It is also a good investment if it is just bought for the land which means that you are not planning to use the building, but use the land as an investment property.

Need to Invest in Real Estate? 4 Degrees can Help

Investing in commercial real estate can be a great way to grow your wealth. But before you buy commercial property, do your research, make a clear decision about the property you want to purchase, and get involved with a professional who is experienced and knowledgeable.

4 Degrees is a trusted and dedicated commercial real estate company. Whether you’re a seller or a buyer, we have the knowledge and experience to assist you with all your real estate needs. 

Contact us for any help with commercial real estate; we are committed to quality, integrity, and attention to detail.