When running a business, purchasing a commercial property is a cost-effective measure than paying heavy monthly rentals on lease. You can further maximize your savings after acquiring the property by performing a cost segregation study and qualifying for tax benefits. However, buying commercial real estate entails more risks than purchasing a residential property. Here’s what you need to do before making a considerable investment:
1. Study the location
The location of your business can make all the difference. Your shop should be convenient for your customers and suppliers. It should also have access to highway, rail, or shipping lanes. To know if it’s the right market to sell your products or offer your services, you have to gather the area’s demographic information. The population and income of your target clients should be enough to support your business. It will also help if you choose a neighborhood that houses local companies whose products or services complement yours.
Consider current and future infrastructure development in the area. Improvements such as railway line construction and efficient drainage system can increase the value of your property. Take your time and find out whether the area is developing or declining. The lucrative location today can turn to an ignored destination tomorrow. Or the present not-so-hot neighborhood can become a growing business hub with promising opportunities in the years to come.
2. Examine the property’s physical condition
Anyone who is buying a commercial property needs a structural property survey. A professional will inspect the condition of the property, look for safety risks, and point out the need for major repairs before you finalize the deal. The result of the inspection will help you make a confident purchase decision and will minimize unpleasant surprises and unnecessary expenses in the future.
3. Check for available support services
Parking, security, lift, and other support services should be considered before sealing the deal. The availability of these services will not only help you run your business successfully, but they can also increase the resale value or rental fee of your property.
4. Examine the zoning
Zoning does not only restrict the property to specific purposes, but it also set standards for the placement and size of infrastructure inside the property. If you overlook this criterion, you will have to jump through additional and complicated hoops before you can start your business operation. It is also essential to check the zoning of nearby properties to avoid nasty surprises in the future. The open meadow vista in front of your prospective property can be zoned for heavy industrial uses in the next five years.
5. Seek advice and assistance from the experts
Commercial real estate is a huge purchase, and making the decision alone is a bad idea. It is crucial to work with experts in the industry who can provide useful advice and assistance. A real estate agent will help you search for a property that matches your business needs. You also need to ensure that your real estate lawyer has read the fine print and reviewed all the documents before you finalize the deal. This will ensure that the purchase agreement and all connected transactions are legal and valid.
While there is no one-size-fits-all strategy in buying a commercial property, doing research, seeking assistance from the experts, and exercising due diligence can result in a higher return of investment.