When looking to purchase commercial real estate, you have to consider both your short-term and long-term needs. If you’re too short-sighted, then you could find yourself chained to a property that doesn’t meet your needs and that could place a restraint on your business operations and your ability to maximize your profits. If you don’t want that to happen, then you must know where the biggest mistakes are made when securing commercial property.
There are a lot of errors that can be made, too. So, let’s look at some of the most commonly made mistakes so that you have a better idea of what to avoid as you navigate the process of picking the commercial real estate property that’s right for you.
You have a lot to think about as you seek out a commercial property that’s right for you. As you start your search, be sure to look out for these mistakes so that you don’t find yourself trapped in a purchase agreement that’s contrary to your and your business’s best interests:
- Misunderstanding zoning and land use restrictions: You need a commercial property that’s suited to your needs. If you fall in love with a commercial property and buy it without fully considering the zoning restrictions that have been placed on it, then you could wind up with a property that you can’t really use. This can limit the scope of your operations, prohibit growth and even impact your ability to reach consumers. So, be sure to gain a full understanding of any land use restrictions that are applicable to the property at hand.
- Failing to take repairs and maintenance into account: The property you’re looking at might seem perfect, but it could be more expensive to repair and maintain than you expected. As you’re looking over the property, then, you should fully consider which repairs are needed and how expensive they’ll be. Also budget out the cost of maintaining the property so that you have a realistic expectation of the costs moving forward. Only then will you be able to secure a property that won’t eat away at your budget so much that you find yourself consistently in the red.
- Neglecting to fully understand the market: Before settling on a property, you have to truly understand the nature of the market. If you’re hoping to rent out space, for example, then you’ll want to assess the demand for commercial leases. If you’re expanding your business to a new location, then you need to know the demand for your products or services. If you don’t do your research here, then you’ll increase the likelihood that you’ll wind up with a property that doesn’t suit you needs.
- Misunderstanding how to get the best financing deal: When you’re dealing with the purchase of commercial property, you’re dealing with a significant amount of money. If you incompetently seek out and negotiate a lending agreement, then you could be subjected to terms that aren’t in your best interests and that are more expensive than you can afford. So, make sure you know how to get the best borrowing deal so that you avoid unnecessary costs.
There’s a lot to think about as you navigate the commercial real estate purchase process. If you don’t feel confident addressing the intricacies of a purchase agreement on your own, then you should seek out guidance from someone you trust.
