If you want to invest in commercial real estate you need to know the most effective and economical way to do it. It may not be enough for you just to have the right amount of capital to meet your goals. In order to make a wise investment, you need to familiarize yourself with the pros and cons of investing.
It is no doubt that purchasing property can be an extraordinary investment for yourself personally or for your business. This is especially true if you choose to purchase the property for your own use in order to avoid rental fees and other challenges.
However, as a wise investor, you must be aware of certain factors before you purchase anything, such as your own personal or business financial stability. Only after careful consideration and scrutiny can you hope for an investment return.
Here are five considerations before purchasing commercial real estate:
1. Check the Pros and Cons. The very first step to take is to scrutinize the advantages versus the disadvantages of buying property. A pro would definitely be if you were desirous of a maximum investment return versus leasing returns, which can be minimal.
You can claim depreciation of the property on your taxes if your company has considerable profits. Keep in mind that owning additional properties will increase the appreciation of your assets in time thus resulting in your company’s equity growth.
2. Talk To Experts. Investing in commercial real estate can be tricky business so you’ll definitely need to find some experts for advice. Start by talking with a mortgage broker, an attorney, a commercial realtor and an accountant.
You can trust these people to advise you on funding, contracts, potential properties for sale and all of the financial options available.
3. Choose Your Property. There are many things to consider when looking for commercial real estate. Condition, location and accessibility are very important. Are there any zone restrictions on the operation of this business?
4. Secure Financing. Buying property will most likely always require a down payment. Before even applying for the mortgage, make sure you have enough money to easily make that down payment. Also, you’ll need to be able to prove you have enough steady income to make the mortgage payments.
5. Buy the Property. You will receive a sales agreement telling you what your obligations and rights are. Make sure you have your attorney look over the agreement and explain any detail you don’t understand. Buying property is a very important decision, and you don’t want to be taken by surprise in any part of the transaction.
There’s another advantage of buying commercial real estate. Not only is this a place to operate your business but, if space allows, you may be able to rent part of the building out to another business. This can produce added income, which can be applied to your mortgage payments. Overall, it can be a lucrative investment.