**Originally Written for Keller Williams Realty**
Commercial real estate can be a profitable venture. If you’re new to commercial real estate investing, you need to understand the risk 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. Commercial real estate can be translated to property used for business purposes. Types of commercial real estate properties can include retail, hotels, motels, residential, industrial and land (developed or undeveloped). Determine which property is right for your investment.
Do Your Homework
Visit a variety of properties. Figure out what works and doesn’t work for your needs. Contemplate the price and the condition of the property. Location is very important. Don’t just look at the property. Investigate the surrounding area. How is the neighborhood doing? Are any changes expected to happen that would impact the property? Determine why the owner is selling. Discovering their reason can impact your final decision.
Gather a Team of Experts
You’ll need to hire a commercial real estate lawyer, mortgage broker, a 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 entire 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 is always more than one way to finance commercial real estate.
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 written agreement.
Make sure there are no issues with the property that can 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 smoother. Alex Biliouris can help represent you on this journey. Call him today at 401-352-4607!