Commercial Property Purchase Do’s & Don’ts
The Do’s and Don’ts When Buying Commercial Property
Investing in commercial property is a great way to ensure your business has the space to thrive and grow. Here is a list of some things to take into consideration before you do.
The Do’s!
Define Your Objectives: Clearly outline your goals and objectives for purchasing commercial property. Understand whether you’re looking for rental income, capital appreciation, or for your own business use.
Financial Planning: Determine your budget and secure financing in advance. Consider all associated costs, including property taxes, maintenance, insurance, and potential renovations.
Location Research: Research and choose a location that aligns with your business strategy or investment goals. It would help to consider factors like accessibility, local demographics, and economic trends.
Due Dilligence: Conduct comprehensive due diligence on the property. This includes a thorough inspection, zoning regulations, environmental assessments, and potential legal issues.
Negotiate Effectively: Negotiate the terms of the deal, including the purchase price, financing arrangements, and any contingencies. Be prepared to walk away if the terms don’t align with your objectives.
Understand Lease Agreements: If the property is leased, review existing lease agreements carefully. Understand the terms, rental income, and the rights and responsibilities of both parties.
Engage Professionals: Hire experienced professionals such as real estate agents, lawyers, tax and accounting advisors, and property inspectors. Their expertise can help you navigate legalities, understand market trends, and identify potential issues with the property.
Future Potential: Evaluate the future potential of the property. Consider upcoming developments, infrastructure projects, and economic trends that could impact the property’s value.
The Don’ts!
Being Unrealistic About Returns: Don’t be overly optimistic about potential returns. Realistic projections are crucial for making informed decisions and avoiding financial disappointment.
Ignoring Market Trends: Don’t ignore current market trends. Stay informed about the local and broader economic conditions that could impact the property’s value.
Overextending Finances: Don’t overextend your finances. Be realistic about your budget and avoid purchasing that could strain your financial resources. Your Finance Broker can help steer you in the right direction.
Neglecting Legalities: Don’t neglect legal aspects. Ensure that a legal professional reviews all contracts and agreements to avoid legal complications down the line.
Overlooking Operating Costs: Don’t underestimate the operating costs associated with the property. Consider maintenance, utilities, insurance and other ongoing expenses to accurately assess the property’s financial viability.
Forgetting Purchasing Costs: Consider purchase costs that are on top of the property purchase price such as GST, Rates and Adjustments. Your Solicitor or Conveyancer will help you calculate these additional costs.