Buying a new commercial real estate property is a bold and costly step for a business of any size, and as an owner, you need to pay attention to the many pitfalls and traps facing an inexperienced buyer. Starting from unpredictable buildout costs to poor layout, issues with funding, to legal problems with environmental laws, there’s a host of potential problems to watch out for.
You may be wondering – is there even any sense in purchasing your own space when you could simply rent and transfer the bulk of problems to your landlord? It does, in fact, make sense to purchase your own property, provided you can afford the financial burden. Not only will you avoid the inevitable rent increases, you may also benefit from the increase in property value over time.
To help you out with avoiding potential troubles, here is a list with 4 tips on what to do when you’re in the market for purchasing new commercial real estate space.
Sort out your financing
This is the foundation for any commercial real estate purchase and you absolutely cannot skip this step. Before heading off to a bank, meet with your accountant so you can see what budget you are working with. Once you’re at the bank, the clerks will want to see financial statements and proof of your business’ solid foundations. It’s a good idea to look around and find the best financing package. The best offer may not always be reflected in the interest rate alone.
Get professional assistance with tax issues
In commercial real estate transactions, tax issues can quickly get out of hand. For this reason, you should get help from an accountant who specializes in CRE deals. Accountants can help you sort out issues such as whether your purchase should be considered a corporate or personal transaction.
Get to know the local real estate market
Before choosing your property, you should look at the bigger picture and analyze the market where you are buying. Each market comes with its own intricacies, such as land inventory, environmental issues and tax rates. This may not be an issue if you’re simply relocating within one market. However, you will need to spend more time on research if you’re moving from market to market.
Choose your builders wisely before buying commercial real estate properties
It’s crucial to know exactly who you’re hiring as a builder. Primarily, you should be looking for builders with expertise in your specific field. Whether it’s office, medical, retail or some other type of property, they need to be experts in this field. Make sure to have insight into your builders’ portfolio and watch out for these crucial traits: knowledge of your specific industry, overall experience and timeliness.
Once you’ve taken these tips into account, you should be well on your way to your successful commercial real estate purchase.