10 Things to Consider When Buying a Commercial PropertyAugust 8, 2022 2022-08-08 17:25
10 Things to Consider When Buying a Commercial Property
10 Things to Consider When Buying a Commercial Property
While buying a commercial property forms an exciting proposition, dealing with the complexities of finalizing the right one could make it a daunting affair. The latter either results in wrong choices or makes people reluctant to invest in real estate. However, when you know what factors to consider while buying a commercial property, you can make an informed and promising choice.
10 Factors to Consider While Buying a Commercial Property
From the property’s location to its documentation, you must gauge the property on these parameters to make a choice that reaps healthy and sustainable returns.
- Assess the Location
Location is among the first things to consider while buying a commercial property. When choosing a location, you must evaluate it on various factors. Some of the most significant ones include the following.
- Accessibility and connectivity
- Business potential in the short and long run
- Proximity to various parts of the city
- Nearest residential area, if you plan to buy a retail space
- Proximity to industrial areas, if you intend to buy a space suitable for consulting businesses
- Infrastructure like railway stations, bus stops, metro stations, etc.
Choose locations that suit the kind of property option you intend to buy. But which types of properties could form options? That’s precisely the next point.
- Review Various Options
Stay open to options unless you have something very specific in your mind. Property options could include a restaurant space, a showroom, or an office suitable for a bank, IT firm, or consulting business. Some options could be as extensively spread as an industrial warehouse, a workshop space, etc.
Similarly, stay open to various location options as well. It is because the business potential varies from location to location. Many locations across the city would have recently started developing, whereas some might have already reached saturation. Besides, while some locations would suit a B2C business, a few others may benefit from the B2B perspective. So, select a location that proves fruitful for the business for which the space is intended.
- Review the Office’s Layout
Remember, buying a commercial property requires inspecting each aspect and considering every microscopic factor associated with it. While the layout isn’t certainly a trivial aspect, the consequences of an inconvenient layout are one.
Choose office spaces with a scientific, compliant, and convenient layout. Do not select a space only because it appears lavish. Think from the tenant’s perspective.
For instance, if you buy an office space suitable for an IT company, thinking about the various potential seating arrangements, cabin setups, etc., can help answer your tenant’s questions. Furthermore, including everything they could demand from the property would help you lease or rent the property quickly.
- Check the Developer’s Reputation
When selecting a commercial property, precisely an office space, choose factors like the developer’s reputation, whether the property is under-construction or ready, the number of offices already occupied, and the kind of tenants around the construction quality. Choose developers with a positive reputation for timely completion and quality of construction.
- Look at the Amenities
Commercial projects have evolved over the years. They aren’t merely buildings anymore with shops. Buyers and tenants expect commercial projects to have modern amenities like advanced security, high-speed lifts, fast Wi-Fi, conference facilities, lavish outdoor spaces, and ample parking space. Some commercial complexes walk the extra mile to provide restaurants and gymnasiums.
- Know the Various Costs Involved
Apart from the actual cost, buying a commercial property would include many other costs that could add up significantly to the overall investment. It could include factors like the maintenance cost, registration charges, etc. These costs must be discussed before you finalize the property and sign the papers. Knowing them beforehand would also keep unpleasant surprises at bay.
- Evaluate the Rental Earnings
The most common objective of buying a commercial space is earning the rental income. Accordingly, you must talk to the developer and consult real estate experts to calculate the rental earnings for the next few years and how quickly you can recover your investments.
Properties in prime locations would offer high rental income but come with an equally exorbitant cost. On the other hand, excessively inexpensive properties may not prove as advantageous from the returns perspective. If budget is a restricting constraint, choose a location that keeps your investments within viable limits and at the same time generates decent rental income.
- Inspect the Property’s Documents
Very important! In fact, critical. You don’t want to find yourself in a pickle by buying a litigated or disputed property, do you? Hence, the property you choose must be free of old or any type of litigation. If you find litigation, you might want to talk to the developer and negotiate or opt-out.
Additionally, hire a lawyer to inspect all the property documents. Act as per the lawyer’s advice to either go ahead with the property, discuss some aspects with the developer or stop the deal.
- Hire an Experienced Realtor
Hiring a realtor undoubtedly increases the investment part to some extent. But a realtor’s assistance is worth the commission they ask for. Realtors help you find property options per your choice of location, budget, and investment objectives.
Their extensive database can help you go through various options, streamline some (based on the realtor’s advice) and get comprehensive assistance while buying the property from negotiation to documentation and final closing.
- Stay Calm. Don’t Hurry!
Finding the right commercial property may incur a considerable amount of time. The journey isn’t as blissful or straightforward for everyone. Having patience helps. It keeps you away from luring proposals and helps you make the right, sustainable and promising choice. Coordinate with the realtor and keep searching without giving up. In the meanwhile, you may work on your finances!
We hope these insights help you choose the right commercial property. IREF is a team of real estate trainers who craft real estate professionals who help property seekers make the right investment choices. If you too aspire to be a real estate professional, click here.