Commercial property isn’t the sort of investment that you can return for a refund at a store.
Selecting the right property can either jumpstart your whole business or be its financial death knell.
You don’t have to go in blind through buying commercial property.
Check out these five top tips for selecting the right commercial property without bankrupting you or killing your business.
1. Question Everything
Disregard what you think you know and start from point zero.
Start by answering questions about your business and what you’re looking for in a commercial property.
Here are some basic questions that’ll get you started:
- What kind of property are you going for?
- How will you be using the property? Equity, renting it out, or a combination of uses?
- Could you just lease the property or do you have to buy it?
- What sort of location do you have in mind?
- Are you financially ready to make a real estate purchase of this magnitude?
And start making use of other small business owners’ knowledge and get their advice by asking questions on the Small Business Ideas Forum.
2. Visit the Property
Or properties in this case.
You have to go in person and tour a list of different properties, with different characteristics and at a variety of locations.
While saying “Location. Location. Location.” might be corny, it doesn’t overstate how important your property’s location is for your business.
Your property has to be well-fitted to your business’ needs, which entails having the right mix of price, location, allowed uses, and condition.
Just make sure you do your research and have some real estate calculations ready.
It’s a bit of legwork that will save you a ton of problems in the future.
3. Get Some Experts
Buying commercial property is a complex and lengthy process, but the good news is that you don’t have to go through it alone.
Now what type of experts you’ll need will rely mainly on the type of property you’re going for.
But, there are is a core set of experts that you’ll need regardless, and those are a mortgage broker, a commercial realtor, an accountant, and a commercial real estate lawyer.
Legal services would actually be our first priority on the list.
Of course, if the property you selected is a bit more complicated, then adding some specializations (like notaries or environmental specialists) to your team of experts would be the way to go.
4. Financing Is Key
There are many ways to finance your real estate purchase, but figuring out which way would suit you best is a key to success.
More likely than not, you’ll need the financing help, so, start with the traditional avenues.
Check your local banks, home mortgage companies, and credit unions, and see what sort of interest rates they have on offer for your business.
However, if the common routes don’t work for you, there are other ways to get financed.
For example, ask if the owner/seller would be willing to help with financing and what sort of rates and stipulations they’re offering.
And as always, you’ll have to do your homework and read up on real estate vernacular like lease options, seller financing, and other terms.
5. Take Your Time with Your Offer
We know it can be tough taking things slowly when you’re so close to making your official offer.
However, that’s the time to make all the revisions and double revisions with your lawyer.
As your lawyer will have you sign a letter of intent (LOI) regarding your property and it’ll include all the details and contracts involved in the whole process.
The LOI must be looked through with a magnifying glass to avoid falling into any binding clauses.
If something doesn’t work down the line, your LOI will be the first document the seller and their lawyers will use to nail you down.
So take your time.
Buying Commercial Property: Are You Ready?
We know that buying commercial property is not for the faint of heart.
But once you follow out top five tips for getting the commercial property of your dreams, things will go smoothly for your business.
Need more information?
We’ve got you covered through our small business articles and other resources, so make sure you check them out!