Buying a new commercial property can be a complex process, but having a checklist can help ensure that you get all the steps. Some essential items to consider when buying a new commercial property include:
- Identifying your needs and goals: Before you start looking for a property, have a clear idea of what you need and what you hope to achieve with your purchase. This will help you narrow your search and find a property that fits your needs.
- Researching the market: Take the time to explore the commercial real estate market in the area where you want to buy. This will help you understand current market conditions and prices and give you a better idea of what to expect when negotiating a purchase price.
- Finding a property: Once you understand the market well, you can start looking for properties that fit your needs. This may involve working with a real estate agent or broker, using online listings, or networking with other real estate professionals. You can search online to find suitable properties if you want to invest in a booming city like Phoenix, Arizona.
- Evaluating the property: Before making an offer, it’s essential to consider it to ensure it’s a good investment thoroughly. This may involve conducting a physical inspection of the property and reviewing financial records and other documents related to the property.
- Negotiating and closing the deal: Once you’ve found a property you want to buy, you’ll need to arrange a purchase price and other terms with the seller. This may involve working with a real estate attorney to draft and review the purchase agreement. After the deal is finalized, you’ll need to complete the closing process, which typically involves paying any outstanding taxes or fees and transferring the title to the property.
Buying a new commercial property involves several steps, and having a checklist can help ensure that you get all the details along the way.
Due diligence on a CRE property
Due diligence is an integral part of buying a commercial real estate property. It involves thoroughly reviewing and evaluating the property and its financial records to determine its value and decide whether to proceed with the purchase.
Some critical steps involved in conducting due diligence on a commercial real estate property include:
- Reviewing financial records: This may include reviewing the property’s income and expense statements and any other financial documents related to the property. This will help you understand the property’s financial performance and identify potential issues or concerns.
- Conducting a physical inspection: A thorough inspection of the property can help you identify potential issues or problems that may affect the property’s value or future performance. This may involve hiring a professional inspector to conduct a detailed examination of the property’s condition and inspecting it yourself to get a firsthand look at its condition.
- Reviewing legal documents: Carefully check all legal documents related to the property, including the purchase agreement, lease agreements, and any other relevant records. This will help you understand the purchase terms and identify potential legal issues or concerns.
- Conducting environmental testing: Depending on the property and its location, you may need to conduct environmental testing to determine any potential hazards or contamination issues that could affect the property’s value or future performance. This may include testing for lead, asbestos, or other potential risks.
Conducting due diligence on a commercial real estate property is an essential part of buying a property and can help ensure that you make an informed and confident decision about your purchase.
Utilizing plans to understand future projects
Looking at development plans, construction plans, and upcoming projects can be a helpful way to get to know the local real estate market and understand the current state of the market. By reviewing these plans and projects, you can gain insight into the types of properties being built, the locations where new development is taking place, and the current demand for real estate in the area.
Additionally, reviewing development plans can help you identify potential opportunities for investment, such as properties being built in growing or high-demand areas or properties being made to meet specific needs or demands in the market.
Looking at development plans and other information about upcoming projects can be a valuable tool for anyone looking to understand the local real estate market and identify potential investment opportunities.
City approvals for CRE properties can take longer than expected
Obtaining city approvals for commercial real estate properties can often take longer than expected. Obtaining licenses from the city or local government agencies can be complex and time-consuming and involve several steps and requirements.
Some of the factors that can contribute to delays in obtaining city approvals for commercial real estate properties include:
- The complexity of the project: The more complex a commercial real estate project is, the more likely it is to encounter delays in obtaining city approvals. Projects that involve large-scale development, multiple buildings or structures, or other complex elements may require more time and effort to secure the necessary permissions.
- Limited resources or staffing: City or local government agencies may have limited resources, which can lead to delays in the approval process. In some cases, agencies may have backlogs of applications or other projects that need to be reviewed and approved, which can result in delays for new projects.
- Changes or revisions to the project: If a commercial real estate project undergoes significant changes or modifications during the approval process, this can also cause delays. This is because changes or revisions to a project may require additional review and approval from the city or local government agencies.
Obtaining city approvals for commercial real estate properties can be a complex and time-consuming process; plan for potential delays when developing a project timeline.
Payment history when buying a commercial space
When buying a commercial real estate property, review its payment history to understand its financial performance better. The payment history can provide valuable information about the property’s income and expenses and its ability to generate revenue and make regular payments.
Some key things to look for when reviewing the payment history of a commercial real estate property include:
- Income and expenses: The payment history should provide information about the property’s income, including the rent or other income it generates and the costs associated with maintaining and operating the property. This will help you understand the property’s financial performance and identify potential issues or concerns.
- Payment history: The payment history should also provide information about the property’s payment history, including whether it has made regular payments on time and has any outstanding debts or liabilities. This will help you determine the property’s ability to generate revenue and make regular payments and can help you identify potential financial risks.
- Trends and patterns: Besides looking at individual payments, reviewing the payment history for trends and ways can also be helpful. This may include looking at the property’s income and expenses over time and any changes or trends in its payment history. This can help you identify any potential issues or concerns and can help you make an informed decision about whether to proceed with the purchase.
Reviewing the payment history of a commercial real estate property can provide valuable information about its financial performance and help you make an informed decision about whether to proceed with the purchase.
What makes a buildings ADA compliant
To determine if a building is ADA-compliant, evaluate the structure against the requirements of the Americans with Disabilities Act (ADA). The ADA is a federal law enacted to ensure that people with disabilities have the same opportunities to participate in and access the goods, services, and activities provided by businesses and organizations.
To be considered ADA compliant, a building must meet specific accessibility requirements, including accessible routes, ramps or elevators as necessary, and accessible parking spaces. In addition, the facility must have accessible entrances, exits, and restrooms and be designed and constructed so that it is usable by people with disabilities.
Investigate the seller when buying commercial real estate
Thoroughly investigate the seller before making a decision. This can help you ensure that the seller is reputable and trustworthy and can help you avoid potential problems or pitfalls down the road. You can take a few steps to investigate the seller when buying commercial real estate.
Here are some examples:
- Research the seller’s background: This can help you understand the seller’s experience and track record in the real estate market. You can search online for the seller’s name and company and look for information such as the seller’s previous real estate transactions and any professional licenses or certifications that the seller may hold.
- Check the seller’s financial standing: Ensure that the seller has the financial resources to follow through on the sale. You can ask for financial statements or other documents to help assess the seller’s financial health.
- Ask for references: You can also ask the seller for references from previous clients or business partners. This can help you get a sense of the seller’s reputation and the quality of their work.
- Consult with a real estate attorney: Before making a decision, it is always a good idea to consult with a real estate attorney who can help you understand your legal rights and responsibilities as a buyer. An attorney can also help you assess the seller’s reputation and financial standing and can provide valuable guidance throughout the purchasing process.
Research businesses in the area
When purchasing commercial real estate, investigate the other businesses where the property is located. This can help you understand the local market and the potential for success in that location.
Here are some steps you can take to investigate the other businesses in the area when buying commercial property:
- Research the local market: Look for information about the local economy, the business climate, and the area’s demographics. This can help you understand the potential for success in that location. In addition, you can research CRE markets on property listing marketplaces.
- Visit the area: Take the time to visit and see the property yourself. This can help you get a feel for the neighborhood and the local businesses.
- Talk to the local business community: Talk to the owners and managers of other businesses in the area to learn about their experiences and the local market. You can also ask about the local customer base, the competition, and any challenges or opportunities they have encountered.
- Consult with a local agent: A local real estate agent can provide valuable insights into the local market and the potential for success in the area. They can also help you understand the local zoning and regulatory environment and provide practical guidance throughout the purchasing process.
When purchasing commercial real estate as a beginner, conduct thorough research and due diligence, consult with a real estate attorney, negotiate the terms of the sale, and close the transaction according to the contract terms. This can help you avoid potential pitfalls and ensure a successful purchase. It is also a good idea to work with a knowledgeable and experienced real estate agent who can provide valuable guidance and support throughout the purchasing process.