Buying Commercial property

[Alice Chicken]

Hi Everyone,

I am interested in buying commercial property but I am not sure of the process.

I like to know if there is a difference in buying personal properties and commercial.

Any assistance will be greatly appreciated.

Thank you..

[Account Closed]

Commercial properties got different values compared to other types of real estate. Since your investment would be greater, you won’t be able to relax even once. So the best thing to do is to study and learn everything that you need to know while buying commercial properties. Here are some points worth knowing:

1. Know your market – you need to search the market and find the best property. But if you’re the same as other business owners, you won’t have time to do endless shopping to look for a building. So hire a competent commercial realtor to save time and give you a comprehensive research on new development, growth, demographics, or comparable lease/sales rates in the area.

2. Get pre-approved – when you get pre-approved for a loan, it will save you more time because you know exactly what you’re looking for. There’s no sense wasting time to look for a $3 million building if all you can afford is $300,000.

3. Get organized – there is a checklist of documents typically given to you by lenders immediately. SBA 504’s or other full documentation loans could be worth spending extra time to get organized or shave a few points off your interest rates.

4. Have the right reasons – if your exit strategy in the future is not an IPO but simply closing or selling your business, then it would make sense to “pay yourself rent†effectively rather than become an absentee landlord. When you have capital for down payment, consider turning the rental payment into mortgage payment which will give you something for the effort.

5. Consider longer terms and low down payment – this move will make you keep a higher cash flow, preserve your capital to have better utilization, and allow you to redeploy your “capital savings†to other business activities that will generate profit.

6. Consider more square footage – buying increased square footage in a property than what you currently need may be an advantage rather than a liability. First of all, you can always grow with it. Secondly, you can get more rental income with a larger property.

7. Consider adding FFEs – in your 504 loan, consider adding some furniture, fixtures, and equipment.

Indeed, purchasing a commercial property is a profitable investment. Taking advantage of many state and federal tax benefits and diversifying your portfolio could increase your cash flow significantly. Therefore, it’s an excellent financial move.