If you are planning to purchase a commercial property, make it a point to contact a real estate agent who specializes in commercial property transactions.
A commercial property is a worthwhile investment that will give you returns in years to come. If you want to make the most of your money today, investing in a commercial real estate is one of the things you should consider.
Below are helpful tips when buying a commercial property:
1. Upon finding a suitable commercial real estate for your needs, make sure that you have a valuation prepared for it and get a Land Information Memorandum from the local council. These will provide you with more information in assessing the value of the property and its potentials.
2. Getting a pre-approval is a good way of saving time by knowing that commercial property you can afford. It would be a waste of your time looking at $2 million buildings if you can only afford up to $300,000.
3. Take into consideration a low down payment and long-term loans to preserve your capital for better use and keeps your cash flow high. Furthermore, it also allows you to redeploy the capital savings to other profit-earning business activities.
4. Be aware of the market you will be buying into. Hire a knowledgeable commercial agent to find a new property for you. A competent and reliable real estate agent save you time, update you on comparable sales, area demographics, plans for growth or a new development in the area.
5. Make sure that you purchase real estate for the right reasons. Determine if you will benefit and profit more from buying a commercial property than in merely renting it.
6. Buy more square footage than what you need now because you can always expand it. Furthermore, it will give you more rental income.
7. Decide on what kind of entity you use to purchase the property, with options including buying as an individual, buying through a trust fund or buying through a company. Your attorney and accountant can help you decide on the best ownership vehicle to use.
8. Consider to collaborate with another business owner in your EPC if it would be hard to come up with the down payment. Keep in mind that your new partners’ operating business will have to be examined too in order to commit to your loan. Do not forget that you should always use good judgment when looking for a business partner. Make sure to stipulate clearly the buy-out provisions in your agreement and other documents ahead.
The foundation of a successful purchase of a commercial real estate is the return you will get from it. Therefore, the value of the lease is principal. Make certain that you check the existing lease’s term and the financial strength of the tenant.
If the tenant is a company, make sure to check whether a representative of the company has provided any personal guarantee. Know more about buying commercial properties from your real estate agent or from a professional who can guide you in choosing the right commercial real estate to purchase.