Buying Commercial Real Estate – Don’t forget these important points
If you are in the market for investing in commercial real estate, there are some important points to consider before taking the next step. The term commercial real estate can include different types of real estate such as office buildings, single-unit buildings, strip malls, hotels, restaurants or any other real estate where people conduct business.
The best time to start searching for and buying commercial real estate is when the condition of the market is favorable for the buyer. You can begin looking if the prices are lower and a thorough search should result in some good deals out there!
There are many options in commercial real estate ranging from small town office buildings to city skyscrapers in urban cities. The first question to explore is what kind of real estate you are looking for. Once you have decided on the type this will help narrow your search.
Some important points:
- Location – location of the office building will be the most important factor to consider with the accessibility of the building along major highways being the second most important factor. The surrounding areas will determine if a type of business is well suited to the surrounding clientele.
- Intended use – decide intended use of building and then check the zoning ordinances for allowances for your intended use. After location, zoning is the most important consideration in commercial real estate. The property must be zoned correctly in order to move forward.
- Tenants – typically most commercial buildings are leased out to more than one party. Check the rent roll for lessees and how much they are paying for rent. Be certain to check into any contributions to common area expenses. The rent roll will also show the details of the tenants in the building, their leases and expirations dates. Stay informed as a landlord.
- Surrounding areas– check into the area developments to see what is nearby in terms of new development that could possibly decrease the value of the building. For example, if it is situated near airports or freeways, where noise levels can be a factor.
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