Before moving forward with a commercial property purchase, you need to conduct due diligence so that you know exactly what you’re getting yourself into before taking the plunge. There are a lot of articles out there that walk you through the due diligence process, but in this post we want to do something a little different.
We want to highlight some common mistakes that investors make when conducting due diligence so that you know where you’re vulnerable as you navigate your real estate transaction.
Mistakes to avoid when conducting due diligence on a commercial property
Successful due diligence requires thoroughness and patience. It also necessitates that you avoid making costly mistakes like:
- Improperly valuing the property, which could leave you paying more than you should.
- Not thoroughly reading existing leases to ensure that they’ll remain in place when the property is sold.
- Neglecting to assess whether the property is up to code, as remedying code violations can be enormously expensive.
- Deciding not to walk through the property in its entirety, since you could uncover huge issues in any corner of the property.
- Neglecting to consider the competition in the area.
- Assuming that zoning variances will be granted and thus closing your deal before you have proper approvals.
Any one of these mistakes can leave you with a deal that’s unfavorable to you in both the short-term and the long-term. You don’t want that for yourself.
Do you need help protecting your interests in a commercial property transaction?
There’s a lot that goes into an effective commercial real estate transaction. And any errors made along the way can be costly. For that reason, it’s a good idea to seek out any support that you might need in addressing your commercial real estate transaction issues. By doing so, you’ll hopefully obtain a favorable outcome that sets you up for success.
