For those who are new to the commercial real estate business, the overview is fairly easy to grasp. Purchase commercial property below market value, renovate it, and then either sell it for a higher price or rent it out to tenants. However, when you zoom in to a more granular level, the process can get more complex. We have put together a short list of things you should consider when purchasing commercial property.
Look At The Neighborhood
Before purchasing commercial property, drive around the neighborhood, as well as other nearby areas to get a feel for what similar properties are going for. Look at listings online. If you are looking to purchase a home to flip or rent, take into account the commercial property’s proximity to schools, businesses, and downtown nightlife. These factor may allow you to increase the selling or rental price.
Always Budget For The Unexpected
Every commercial property is unique, and that is never more evident than during the renovation and construction stages. What may not be seen during a walkthrough, such as outdated wiring, faulty plumbing, cracked foundations, or rotted joists, can end up costing quite a bit to repair or replace later on. Never purchase commercial property without leaving yourself some financial cushion to handle any unwanted surprises.
Have A Third Party Inspect Your Commercial Property
Dong a walkthrough is great. Seeing the list from the seller’s inspection is good, as well. However, nothing beats getting your own inspection done before shelling out money for commercial property. Independent property inspectors tend to be more thorough than others, and will look for the little details which could turn into big tasks later on, during renovation. Spending a little extra for a third party inspection can end up saving a lot of time, energy, and capital in the long run.
Get The Financing You Need
Purchasing you first commercial property can cost a little more than most people have in the bank. Additionally, it is always wise to get as much financing from other sources before dipping into your own savings. However, banks are reluctant to hand out loans to first-time buyers with the express purpose of flipping or renting out commercial property. Fortunately, there are a number of alternative financing solutions which are both affordable and accessible to commercial real estate investors. Contact Vortex Funding to learn more about the various commercial real estate financing options to cover everything from your first purchase to construction, and even staging a property for sale.