Commercial real estate can be a profitable venture. If you’re new to commercial real estate investing, you need to understand the risks and benefits. Here are six things you need to know before procuring commercial real estate.
Types of Commercial Real Estate
Commercial real estate is more than just office space or warehouses. Types of commercial real estate properties can include retail, hotels, motels, residential, industrial and land (developed or undeveloped). Determine which property is right for you and your investment.
Do Your Homework
Conducting thorough research is important. Visit a variety of properties and determine what works and doesn’t work for you and your interests. Consider the price and the condition of the property. Are any neighborhood changes expected to happen that might impact the property? Determine why the owner is selling. Doing research will give you a well-rounded picture of your investment.
Gather a Team of Experts
You’ll need to hire a commercial real estate lawyer, mortgage broker, certified public accountant with experience in commercial real estate, and a commercial realtor. Depending on the complexity of the property, you may need to hire environmental specialists, engineers or appraisers. Never attempt to go through the process without professional help.
Many people cannot finance the purchase of commercial real estate on their own. Determine which banks or credit unions you can use for a commercial loan. Ask the current owner if they assist with financing. Consider finding an investor to help you raise funds. There are many ways to finance your commercial investment.
Don’t Sign Anything Without Your Lawyer’s Approval
Once you make an offer and it’s accepted, have your lawyer explain every detail of the agreement. There will be some commercial real estate vocabulary you may not know. Your lawyer needs to verify that all necessary information was included in the agreement.
Make sure there are no issues with the property that could impact your business. Hire a property inspector to ensure the property is in working condition. If any issues are discovered, negotiate with the seller over any work that is required. Make sure you acquire the appropriate insurance coverage and it goes into effect on the date you become the owner. Sellers are required to disclose any property or environmental issues that may compromise the property. Review the disclosure to determine if you have to take any additional steps to meet property or environment regulations. If you discover the seller wasn’t truthful about the property, you have every right to cancel the transfer of funds.
Buying commercial real estate can be a lengthy process, but if you do your research and surround yourself with professionals, the process will be a lot easier. Alex Biliouris can help represent you on this journey. Call him today at 401-352-4607!