What should I know before closing on commercial real estate?

| Jul 2, 2021 | Commercial Real Estate |

Purchasing a commercial property can be a wise business investment. However, multiple factors can make commercial real estate transactions challenging.

You must perform your due diligence to protect your interests. But, what should you consider?

Three considerations for protecting your business interests

Location is one of the most significant factors in both residential and commercial real estate decisions. Running a business in a specific area, however, raises questions about zoning laws, nearby competition, local trends and customer accessibility.

Other important considerations include:

  • The property’s condition. What kind of work will you need to do to prepare the building for your purposes? Maintenance is a normal part of ownership, so don’t be surprised by the costs of regular repairs. However, a thorough inspection beforehand can mitigate the risk of future problems with the presence of asbestos or mold.
  • Financial commitment. Seller may require a down payment, or earnest money, to prove your intent to purchase a building. Understand the corresponding refund policy in case, for whatever reason, you cannot move forward with the transaction.
  • Classification. Commercial properties are classified according to function and risk. Do you accept the potential complications of the building you’d like to put an offer on, or would potentially making a larger investment elsewhere be in your long-term best interest?

The potential properties you consider will likely all have benefits and detractions, though you might not identify them without conducting your research.

Regardless of how quickly you’d like to relocate, doing everything within your power to make an informed decision about your property purchase holds the potential to do far more for your company than provide a place to conduct business. It is essential to understand the full consequences of your choice to mitigate risk and increase your chances of success.