Investing in commercial real estate is a difficult task if you are not skilled at it. There are certain principles that professionals follow while buying or investing in such properties. Real estate is one of the ever-green investment sectors but one that is full of loopholes that can suck all your investment and force you out of your own house. At the same, the sector is also full of opportunities if you maintain investment discipline and do your homework thoroughly, before making the move.
As an advisor and consultant that have been involved in real estate Moorabbin and other surrounding areas in Melbourne, we help our clients on a daily basis to make better commercial real estate investment decisions. As professionals, I do in-depth research for every piece of property that comes under my radar and before recommending it to a prospective client, I go extra lengths to comprehend all aspects of the property. I work through a checklist of factors along with using my real estate agent senses. While passing on all that nuance might not be possible in this article, I think the following steps should put you on the right course.
Ask yourself quite a lot of questions
The first step in buying a commercial property is knowing your needs and situation. You should know what you are looking for. Here are some of the question you should be asking yourself:
- What kind of property do you want?
- Are you going to use the building yourself or renting it out?
- What kind of location do you need?
- What is your budget?
- What is your risk tolerance?
- Do you need to buy the property or lease it?
- Are you going to hire an expert?
- Finally, are you ready/willing to invest?
Visit as many properties as you can
Visit as many different real estates as possible and consider price, location and condition of each one of them. Buying an industrial property is a considerable investment, and you have to explore as many options as you can. Don’t rely on the pictures; tour various properties personally. Images and videos give you a general overview of the property but personal visits provide you the actual feel. This is very important for your senses to make judgements. Research each, watch out for the amenities like parking, security, gym, retail shops, restaurants, access to transportation. The commercial property you choose should be fit for your needs in terms of location, price, uses and investment required.
Take help from experts
Buying commercial property is a risky investment. You will need experts to help you with some of the steps. The numbers of experts you need will depend on the type of property you are willing to buy. You need to hire a reliable real estate company, accountant and a lawyer to help you buy the best commercial property. Instead of going for big brand companies, we would recommend you to work with local real estate agencies that have better knowledge of the locality and give you better options in their area. Working with smaller and boutique commercial real estate agency also saves you from unnecessary layers of commission that bigger real estate agency charge. There are many things that you can do on your own (and should do) but to be on the safe side hiring experts is a better choice. By doing this, the risk decreases and you don’t have to do all the grunt work and minimize the risk.
Figure out the financing
Like most people, you might not have the cash to buy the property; you will need to get some financing help. Determine how you are going to manage your finances. If you are applying for a loan, find the one with the best interest rate — research more than one way to finance your purchase so that you don’t get into a problem afterwards. If you are working with experts or an agency, then reach out to them and share financing plans. Since most of the commercial real estate agencies have close ties with lenders, including banks and investment firms, they can get you a better deal for your investment. There is no harm in seeking their opinion and their offer in this regard.
Involve your lawyer
The most important thing that one has to while buying a commercial property is signing a letter of intent. This letter outlines the term of the transaction. As a rule of thumb, always ensure that you have legal aid. Don’t sign any papers without the consent and advice of your lawyer. Let your lawyer explain everything written in the agreements to you so that you know what your obligations and rights are. And finally, further the process to buy or rent or lease the property.
If you put in your efforts and time in research, there are very fewer chances of going wrong with your purchase. But always remember to consult an expert if you are in doubt.
About the Author:
Christian Taylor, is a real estate agent associated with Just Commercial, a boutique real commercial and industrial real estate agency in Melbourne. The agency specializes in selling, leasing and renting of commercial and industrial properties in the South of Melbourne. Reach out to him reception[at]justcommercial.com.au