By Ritesh Sonavane on May 3, 2019 3:56:33 PM
Buying a commercial property, especially to run your own business is a cost-effective decision. But before deciding to make any purchases, it is incredibly crucial to consider a few vital aspects. They must be studied carefully along, and none should be ignored, thinking it's not essential or might never affect your business.
Wouldn't it be great if you already knew what things to look for in commercial spaces before buying them? So, to make your life simpler, here are ten essential factors that must be considered before purchasing a commercial real estate:
1. Analyse The Neighbourhood
Location is imperative as there might be certain areas that are more affected by the economic downturn and a commercial property provide returns through two avenues— rent and capital appreciation. Both of which are heavily dependent on the location.
Also, functional connectivity via road, rail or water transport is required to run the business successfully. (How conveniently located is your property?)
2. Do a Complete Research
Researching the property has to be the most crucial part of it all. As you look into long-term predictions for the location you are viewing property in – understand if there is anything that may help or hinder property values in the future?
Ample amount of time spent on researching the perfect location for your new business is not considered a waste of time. (Research - the most important aspect to research about a property)
3. Keep in mind - Accessibility
User-friendly services like parking, lift, security, etc. must also be carefully studied while finalizing the commercial property. Something like a parking space is easily forgotten about. And if the property is located near to any means of public transport, such as a train station or a bus stop, there are ways for employees to travel into work.
However, if you are based in an out-of-town location, a car park is a valuable asset – not just for your staff but also for the clients that visit. (User-friendly services)
4. Be Realistic
We need to understand that expecting too much too soon, especially with something like a commercial property isn't entirely correct. We need to look at it from a business perspective and not fall into the trap.
The best plan when buying a commercial property is always to be aware of how you'll be financing your purchase. For which you'll study the market religiously and remain patient. By doing so, not only will you be aware of the opportunities, you'll be ready to pounce and reap the rewards. (look at it as a long-term business perspective.)
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5. Watch Out for Hidden Charges
Almost all properties have hidden costs and these costs include the running and maintenance of the property. These potential costs must be estimated and discussed in advance and discussed in the 'contract' itself. (Property maintenance cost)
6. Filter Tenants
A good tenant is fundamental and beneficial to increase the value of a commercial property. Include and look for multinational Companies and avoid smaller and unknown companies. A good, responsible tenant would pay rent on time, pay higher deposits, and will be with you for a long-term horizon. (Very important to have a good, reliable tenant)
7. Don't Miss the Minute Structural Details
Always calculate the maintenance that might still be in the works at the property. It is always good to ensure that there are no hidden defects in the property. Make a careful study of the state of the building itself, the fibre connections, the cell phone coverage. The infrastructure, such as air conditioning. (Ensure that there are no hidden defects in the property.)
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8. Litigation Matters
Your invested commercial property should be free of any old or existing litigation. If there is any litigation that's found on the property, then the buyer gets a chance to re-negotiate, or if necessary, they can decide to walk out of the deal immediately. (Make sure your property is free of any legal implications.)
9. Be Actively Involved
It's essential to understand that investing in commercial real estate is not a passive investment. A successful investor plays a very active role and stays on top of things going on. They have systems and processes in place to ensure that the property is achieving its maximum operating potential. (Be involved in the process from the beginning.)
10. Flexibility and Scalability
When you are viewing your commercial property, it is vital to look for flexible premises. It is an inevitable fact that your business will surely be continuously expanding and changing while you occupy the property. So it is vital to find premises that can be modified over the years to suit your business.
If you put in the time and effort that is important to understand commercial property investment, then you can significantly gain from them. But, keep in mind that the location, research and finances will always come first, and when in doubt, it's still good to consult an expert.
We would also recommend you talk to a real estate expert or consultant and a lawyer to make the whole process much smoother and more comfortable for you.