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5 Things to Look for When Purchasing Commercial Real Estate

Purchasing commercial real estate may be a wise financial decision for your business or company. Buying your own commercial space can save you money instead of having to pay rent every month, but it will only be successful if you do your research and are prepared for this large investment and responsibility. There are many factors to consider before you decide to take the plunge and buy commercial real estate of your own. Here are the top 5 things to consider and look for before purchasing commercial real estate.

  1. Weigh the pros and cons of this investment. If you buy a property wisely, you may get a great return on your initial investment, which is what you should always look for when buying real estate. In addition, you may be able to profit in your business substantially and be able to offset any tax charges or other utility fees, making the option much more feasible. Finally, owning commercial real estate can be a great business decision since it allows your company’s equity to develop and grow over time. While these are the best-case scenarios, there are also downfalls to commercial real estate ownership when not executed correctly. It can be quite risky actually, if you are not well informed or advised. Sometimes the area where your property is located may deteriorate in quality and leave your business in an undesirable and unprofitable area. Another downfall to purchasing real estate is that your money will be tied up in the commercial real estate. You will likely have to invest a good amount of money into the real estate. This is money that the business cannot use or have access to for other business related expenses or investment, which could be wiser. Finally, as a commercial real estate owner, you may have other companies in your office building paying rent. This can be a good source of cash flow in some situations, however it is not always consistent or reliable. Often leasers will not pay in full or will not pay on time, which may require you to front a lot of money out of your company’s own pocket.
  2. Ask the professionals. It is smart to set up a real estate investment team before you make any important decisions. These individuals are experts and will know the ins and outs of the buying and investment process so that you are well informed throughout the experience. First, you should have an accountant on hand who can help you and your company to protect your assets. The can also help reduce your liability as a commercial real estate owner. Next, have a lawyer on hand who is familiar with real estate law. They can help you with any contracts and closing procedures. Also be in touch with a mortgage broker so that you can fund your investment as well as a commercial real estate agent who will show you appropriate properties in your price range and for your needs.
  3. Next, there are a lot of things to consider in the commercial property itself. When looking at potential properties, consider where the space is located. Location matters. Make sure it is in an area that is vibrant and easy to get to for your employees and your clients. Also make sure it is in a high demand area so that you won’t have trouble selling it down the road. Finally ask about zoning laws, and information about running and operating a business in this area.
  4. Make sure your finances are in order. You should have a mortgage agreement in place with a mortgage broker at a reasonable interest rate. Also be sure that you have enough cash up front to be able to pay for the down payment on the property. You should also know that you business’ monthly income is more than enough to cover payments each month such as utilities, taxes and more.
  5. Finally, sign on the dotted line. Once you have considered all of these important factors, you will be ready to purchase your commercial real estate property. Be sure you sit down with your lawyer and realtor to understand your rights as well as your responsibilities as a building owner in full so there will not be any surprises later on. Then, you can celebrate a new and exciting chapter in the progress of your business’ growth!

It is really important that you consider all of these factors in order to make sure that purchasing commercial real estate is a wise choice for your company or business. If it is, you should understand commercial real estate leasing, responsibilities, payments, the location and more. Working with professionals will help you to feel comfortable and confident in your decision.

 
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