Commercial Property Buying Guide
Purchasing commercial property such as warehouses, hotels, office buildings, shopping centers, and even apartment complexes offers many advantages. In addition to helping you build equity, adding commercial property to your portfolio can help make your expenses more predictable while also possibly helping you gain certain tax advantages. Of course, owning commercial property also gives you total control over the property, giving you the freedom to customize and tailor your business as needed. To ensure you get the best property possible to suit your needs and goals, here are a few tips to keep in mind when purchasing commercial property.
Tip #1: Clarify Your Objectives
Before you begin your search for the perfect commercial property, you first need to have a clear idea of what you hope to achieve with the purchase. If you plan to use it for your own business, for example, the type of property you need may be different from if you are purchasing the property in order to rent it out or to simply build equity. Your short- and long-term objects may also impact where you choose to purchase the property as well as how much you are willing to invest in the purchase.
Tip #2: Assemble a Team
Assembling a team of experts to help with the process can help make things go smoothly while also protecting your finances. Some experts you might want to have on your team include:
- Accountant: can advise you on what you can afford while assisting with navigating through tax benefits and budgeting
- Commercial Broker: can assist with locating properties in your price range
- Lawyer: can serve as your legal representative when negotiating and making a purchase
- Mortgage Broker: can assist with obtaining the proper financing
- Property Manager: can manage the day-to-day needs of your property, including collecting rent and ensuring maintenance needs are addressed
Depending upon the type of property you purchase and your objectives, you may need to add a few additional experts to your team.
Tip #3: Consider Legal Issues
Once you have determined how the property will be used, you need to consider legal issues that may impact your purchase. For example, zoning laws and building codes may impact how the property may be used, thereby limiting the possibilities for the property. If you want the flexibility to change the property’s purpose in the future, restrictive zoning laws may be an issue
Tip #4: Complete Thorough Inspections
Before making a purchase, it is essential to complete a thorough inspection of the property. An inspection involves examining the physical condition of the property. Not only is this necessary so you can ensure that everything is in proper working order, but it can also help you to address any potential liability issues. If the property contains lead paint or asbestos, for example, this could be problematic in terms of extra expenses as well as in terms of creating extra-legal issues for you to handle. You will need to determine if addressing these issues is worthwhile or if it is simply better to move on to a different property.