Thinking of Buying A Commercial Property. Owning a commercial property can be rewarding, both financially and personally, but a commercial property also requires constant maintenance. How to buy a commercial property can appear daunting at first but by following some tips from this article can be easily accomplished.
When financing a commercial property, you will need a higher percentage down payment for a commercial real estate loan. Searching for a lender and a good interest rate can be a time consuming but necessary evil.
Keeping your commercial property occupied is your main goal as a landlord. Vacant properties will cost you money, because you have to pay for maintenance and upkeep without having any income from tenants. If you have multiple unoccupied properties you probably did not research your property enough prior to purchase.
One major part of your commercial real estate purchase is having inspection performed by a Commercial Property Inspector. When property you are involved in is being inspected, take steps to verify the legitimacy of every inspector. This should be especially important if you are purchasing a large type building as Part 3 of the Ontario Building code would apply and most inspectors have little of no training in this area.
Your inspection should include all of the building systems, such as electrical, roof, HVAC and plumbing etc. Most professional inspectors will perform a thermal scan of your roof looking for hidden leaks or potential points of failure.
Ensure the building you are buying has an adequate electrical service for potential tenants as upgrading the size of transformer and supply will be at your own expense. If you are sharing a transformer with other area buildings this can even be more complicated. Do not believe the seller is going to disclose any problems he or she is having with building or existing tenants.
Before you can finance your commercial property purchases, you have to make certain that you have the necessary financial statements and documentation for either your business or yourself individually. Not having your own financial statements in order will make a poor impression on the bank, possibly making them turn down your loan application.
If you plan to finance your next commercial real estate purchase, you should first ensure that you can provide detailed financial statements for prospective lenders. If you do not have these, banks will not know how responsible you are with your money, which makes it very likely that they will not lend you the money you need.
This allows you to make sure the lease matches rent rolls, along with the pro forma. If you don’t review the key terms, you may discover terms which were not contemplated for the rent roll. This could quite possibly result in a change to the pro forma.
When advertising your available commercial property, do so locally, but also regionally and even nationally. Many make a mistake in assuming that the only people who want to buy their commercial real estate property are those who are local buyers. Many private investors are willing and able to purchase properties outside their immediate community if the price is right.
When you are choosing real estate brokers, you should find out the brokers’ experience level in commercial real estate. Don’t use a broker who doesn’t specialize in the type of real estate investment you’re interested in. Sign an exclusive agreement once you’ve found a broker you want to work with.
Before you buy commercial real estate, make sure you have a firm vision of your goal for the property. What are your plans? Do you want to lease or start you own business there? It is important to have things like this nailed down before you start the process, so you do not find yourself struggling with these questions, when by this point in the game, you should be focused on other aspects of any potential deal.
If you are viewing more than one property, you may wish to create a checklist for each site. Take this list with you as a reference when visiting other properties, and use it when speaking with the property owners. You may want to offhandedly let the owners know that theirs is only one of a few properties in which you are currently interested. The information may help you to negotiate more favorable terms on your deal.
You must absolutely confirm that your real estate’s asking price is realistic. There are a number of variables that can affect the realistic value of your property.
Calm and patience are both sound practices when you are searching for commercial property. Don’t jump into any investment without doing your research. You might regret it if you are not satisfied with your real estate goals. Realistically, it can take upwards of a year to find the right investment in your local market.
When you decide to invest in commercial property, set your sights a little higher than before. Instead of purchasing a property with five units, purchase one with 50 units, which you’ll find isn’t going to be any more difficult to manage. A property with nine units requires the same amount of time put into the financing as a building with nineteen units requires, but the larger one has lower per unit average prices and more rental income streams for you.
You need to know the details of emergency maintenance procedures. Be sure to find out who takes care of maintenance in the building and also who handles emergency repair situations. Keep a list of phone numbers close to you, and make sure you select companies that answer quickly. Use any advice you can gather from a landlord to protect your customers with properly configured emergency plans.
If you want to learn a lot about real estate, check out several websites that offer a lot of information to both experienced and new real estate investors. Having a great base of knowledge will give you the tools to complete every part of the buying process with confidence, leading to solid decision making.
Prior to searching for a real estate property to invest in, figure out exactly what you would want in an ideal commercial property. Write down the things you like about the property, important features are office numbers, how many conference rooms, restrooms, and how big it is.
We recommend using the Commercial Property Inspector for any large commercial properties located in Southern Ontario. Call Roger today for your free quote.
For residential inspection qualifications visit the Professional Barrie Home Inspection company.