Are you considering investing in commercial real estate? If so, then you should start by learning the basics of commercial property investing. Buying a property is a major financial commitment, especially if you haven’t done it before. It requires careful planning and research. There are many things to consider, such as location, price, financing options, taxes, and maintenance costs.
Therefore, before you jump headfirst into the purchase, it’s crucial that you prepare yourself mentally and financially. Luckily, this article by Tim Archibald outlines five steps that will help you get started.
Find a Property That Fits Your Needs
When buying a commercial property, you’ll want to make sure that you find something that fits your needs before committing to purchasing it. The first step to doing so is figuring out what type of business you want to start. There are different types of businesses that fall under commercial real estate, including retail, office space, industrial, warehousing, medical, and multi-family residential. Each of these sectors has its own unique requirements that you should consider when looking at a piece of land.
You may decide that you want to buy an industrial building or warehouse, depending on the type of product you sell. However, if you plan on investing in several properties, then you’re going to need to look for something that works well together. You’ll want to think about how much square footage you need and where you’d like to place each building.
Choose the Best Location
Location is everything when it comes to commercial real estate. You want to find a place that fits your budget, provides good access, and where you can easily expand if necessary. A great location can make all the difference between a successful business and a failed investment. That said, finding the right space can be difficult. Here are some tips from Tim Archibald to help you choose the best location for your commercial property.
- Know your market.
- Consider your budget.
- Determine what types of businesses will work well in your area.
- Identify potential locations.
- Look around.
Get Financed
Before you even consider purchasing any property, you’ll need to determine how much money you will need to purchase the property. When calculating the amount of money you need, you’ll need to add in closing costs (things like mortgage insurance, attorney fees, and government fees) plus an additional 20-30% of the total cost of the property.
It’s a good idea to contact your bank about whether or not they offer loans for commercial real estate purchases. Most banks won’t lend you the full amount of money you need unless you have a proven track record and have been pre-approved for financing.
If you plan on purchasing commercial real estate, do not buy a property without first getting financing. You should always get pre-qualified for a mortgage prior to buying a property. If you cannot afford the monthly payment on the amount of money you want to borrow, then you should not buy the property.
Negotiate the Price
Once you find the perfect property, the next step to buying any commercial property is negotiating the price! Before making any offers, make sure you have a solid offer ready. Have a written proposal prepared and be willing to walk away if necessary. Remember, the seller wants to get the best deal possible. Don’t be afraid to ask questions, but be prepared to walk away if they won’t budge. You need to know how to negotiate effectively. Here are some tips from Tim to help you get started.
- Start off by stating the amount you want to pay.
- Be prepared for counter offers.
- Ask questions about the property and what makes it unique.
- Show interest in the property.
- Make sure you have done your research before making an offer.
- Have a plan B if negotiations don’t go well.
Set A Deadline And Follow Up
Once you’ve narrowed down your search, set a deadline for yourself. When you feel that you’ve found the perfect house, make sure that you let the sellers know that you’re interested in purchasing their home. Most sellers will accept offers within a short period of time.
However, If you haven’t heard back from the seller after a few weeks, call them. Let them know that you still plan to move forward with the offer. Keep calling until you hear back.
Conclusion
In simple words, commercial real estate investment takes time, especially when you are just starting out. But the longer you wait, the lower your chance of getting a good deal. However, that doesn’t mean that you should rush into making a decision decision, emphasizes Tim Archibald. Take your time to find the perfect property for you and you will be rewarded with a great return on your investment.
