Things to Look for When Buying a Commercial Building

3/1/2021 (Permalink)

Know the tricks of the trade when it comes to purchasing your commercial property.

Looking for the perfect place to fulfill your lifelong dream of opening a bakery or a toy store? Looking for a new location to help your current business grow? No matter the reason, buying commercial property is a huge investment and should not be treated lightly. It is important to do your homework to ensure the purchase is the right one for you. Buying commercial real estate is a lot more challenging than purchasing a home and there are many things to be considered before pulling the trigger. 

Location

When buying any property the location is a big factor, especially when it is a business. The infrastructure and surrounding neighborhood can either raise or lower the value of the property.

Some questions to consider:

• Are there any similar businesses located nearby?
• Will you have access to any support services like parking?
• What are the market trends for that area?
• What are the zoning laws where the building is located?

Knowing the answers to these questions and making sure they match your needs can save you from potential problems in the future.

Building Classifications

A commercial building is a property that’s used for business purposes. But there are different classifications for different types of property. For instance, office buildings are typically classified as Class A, Class B, or Class C. Class A buildings present the lowest level of risk, while Class C buildings come with the highest level of risk. Industrial buildings and retail stores have their own designations as well, so it’s important to understand how the property you’re considering buying is classified and what it means for you as a business owner.

Building Condition

The last thing you want to do is buy a property and then uncover a mold infestation that will cost you thousands of dollars to remediate. Avoid this by having the property thoroughly inspected before purchasing. Consider also what was the building previously used for and what kind of wear and tear has it been through over the years?

Team of Experts

There is a lot that goes into the purchase of a commercial building and having a team of experts in your corner can increase your odds of securing financing and spotting potential problems from the beginning.

Some of the experts that can help this process run as smoothly as possible:

• CPA
• Contractor
• Commercial real estate attorney
• Commercial realtor
• Mortgage broker
• Tax attorney

Financing Options

You’ll need to find the right financing options to purchase the building. The type of financing you’re able to secure will depend on your personal and business credit scores, the type of property you’re buying, and your lender. It is a good idea to get pre-approved before making an offer and your accountant can help. 

Types of loans to consider for purchasing a commercial building:

• Conventional mortgage
• Bridge loan
• SBA 504 loan
• Hard money loan

Having all the information as well as a good team on your side will go a long way in making sure the property you choose to purchase will continue to be a dream come true instead of turning into a nightmare. Create a wish list of what is important to you and your business using these tips and that will give you a starting point to find the very best match for you.