The decision to invest in commercial property is a complex one. Before you leap headfirst into this very deep pool, take some time to explore your needs and goals as well as the real estate climate in your area. Being careful and deliberate during this early stage is the best way to ensure that this is the right move for you.
Learn the Lay of the Land
Your first priority is to evaluate your needs and goals for the property. What do you hope to accomplish by investing? Do you want to do business there yourself or rent it out? What types of customers are you trying to attract?
For example, if you are looking to bring millennials to your computer sales and repair shop, buying property near the trendy downtown area or close to colleges or universities is a smart choice. In addition, you need to be cognizant of your property requirements. Do you need a lot of space or is a small and cozy building better for your business goals?
Financial Considerations
Obviously, you also have to be very specific about how much you are willing and able to invest in a property. In order to minimize the risk of it turning into a money pit, do your best to calculate whether you will be in the black after subtracting principal, interest, taxes and insurance from the annual income you will receive from renting it. Understanding what has been paid in taxes and insurance over the past one or two years as well as how much income the property has generated can be helpful as you try to arrive at these figures.
Finally, take the time to scope out the neighborhood around your potential building purchase. If it appears to be trending positively in terms of economic growth and development, it bodes well for your success.
Get Help From the Professionals
Investing in commercial property involves a steep learning curve as well as words and concepts that you may have never been exposed to until now. That’s why it is important to hire professionals who can help you to understand and navigate the sometimes maze-like process. A good lawyer, a mortgage broker, an accountant and a commercial realtor will combine to form a team that you can count on throughout every step of the way.
Should your property purchase be more complex, you might also need assistance from engineers, environmental specialists and tax experts. Initiating and maintaining a solid relationship with these professionals can enable you to protect your commercial property and ensure that your purchase remains both viable and profitable.
Get Your Financing in Order
Obviously, you don’t have piles of cold, hard cash lying around to simply hand over when making your commercial property purchase. You will need to find ways to finance the deal. You might choose a traditional bank, a credit union or a home mortgage company. Your success will be determined, at least in part, by your credit and business history. If these standard financing options seem out of reach, you can also look into nontraditional lenders.
Protect Your Commercial Property with Insurance
Even before you sign on the dotted line, you need to consult with an insurance broker concerning your new acquisition. Your commercial property insurance will protect you in case of fire, theft or natural disaster. In addition, it can be tailored to meet the unique needs of your business, which can vary according to your level of risk.
The bottom line is that your decision to invest in commercial property is a multi-faceted and complex one. However, it can be made a lot easier and less stressful if you take time to evaluate your own needs, assess your local real estate situation, get help from the experts and protect your investment with comprehensive insurance coverage. Proceed with consideration and care throughout every step of the acquisition, and you will ultimately make a purchase that suits your needs.