The commercial real estate market has rebounded soundly since the crash in 2009. Moody’s/REAL Commercial Property Price Indices has reported it has increased in value by about 42%. There are two main kinds of commercial real estate. You have large buildings, which are typically valued at more than $2.5 million and smaller buildings worth less than that. Commercial real estate companies handle a variety of building and business types. They include retail space, office buildings, apartment buildings, trailer parks and warehouses. In 2015, these buildings accounted for nearly 48 billion square feet.
6 Tips for Buying Commercial Real Estate.
- Decide what kind of building you want to buy. Do you want to manage your own business in the commercial real estate? Do you want to buy or lease the commercial real estate? You may want to be a little open and consider bigger buildings than you might start out wanting. If you want to get into property management for apartments, for instance, it takes no more work to manage 20 apartments than ten. Spend some time researching different kinds of buildings and businesses before you start talking to commercial real estate companies. If you start the process not knowing what you want, you will absolutely be disappointed.
- Educate yourself about the industry. Before you start talking to commercial real estate companies, you should educate yourself about the industry and that includes learning some new terminology. There is always a learning curve when you start working in a new industry so you should expect to experience some of that when you start talking to commercial real estate companies. If you are interested in managing lodging, this can be apartment buildings or trailer parks, you may end up dealing with tenant representation services companies, you will need to know the best way to do that.
- Take a look at a number of different properties. This is where that open mind will come in handy. Look into all the different buildings and businesses. For each business that you see, look into what worked and did not work at each. Look into the zoning rules and regulations for the buildings that interest you. You may find a space that has been used for one purpose but you want to use it for another. Just make sure the property you end up buying or leasing meets your unique needs and situation.
- Enlist the help of commercial real estate experts. Buying commercial real estate is not like buying a home. The process is more complicated. You will need experts from commercial real estate companies and others to help you through the process. You will need an accountant, commercial real estate lawyer, mortgage broker and commercial realtor. If the type of property is going to involve a more complicated sale, you may need to talk to other experts. There is a chance you will need to talk to tax experts, other kinds of lawyers, environmental experts and engineers.
- Work out your financing. Most people need some help when buying a commercial property. Do you have a personal mortgage? You should talk to your bank. You can also enlist the help of the local credit union. They are community banks that are owned by the employees and one of their main goals is to invest in projects in the area. They are more likely to lend money to locals to start or help businesses in the area. You can also find out if the seller of the property has any interest in or ability to help you with your financing. They cannot say, “yes” if you do not ask. There are a lot of ways to find financing for a commercial real estate purchases. Most commercial real estate companies can point buyers in the right direction for financing options.
- Talk to your lawyer and put in a bid. You should have all paperwork reviewed by your lawyer before you sign anything but when you find the property you want, you will need to make an offer. The first step is to have your attorney draft a letter of intent. This is a document that outlines the terms of your transaction. These are non-binding but start the ball rolling.