Connect with us

Business

What To Look For When Purchasing A New Office Building

Commercial real estate deals can be complex and involved. It is for this reason that these transactions often devolve into litigation. For the most part, though, such complication comes out of simple neglect. It isn’t difficult to successfully conclude a real estate deal. All it takes is a commitment to thoroughness.

What To Look For When Purchasing A New Office Building

Know what you want

Ask yourself the following questions before you begin looking for a property:

  • Does renting make more financial sense than buying?

  • Do you want to use the property for your business alone, or do you want to rent to other businesses, as well?

  • Would you be willing to partner with another business in the purchase?

  • Are you prepared for the credit rating requirements and the down payment requirements? 

  • What is your tolerance for risk, should either your business or the property itself fail? 

Learn

If you are to intelligently participate in conversations and negotiations to do with commercial real estate, you need to be willing to learn about the business. Certainly, you could rely on a dependable real estate agency to be your guide through the process. Nevertheless, according to leading title insurance service Eastern Title and Settlement of Rockville, MD, it’s critical that you be able to rely on your own smarts to some degree as you make your way through commercial real estate transactions.

You might start with important real estate terms such as loan-to-value (the part of the property’s value that the lenders will fund), capitalization rate (the ratio of the property’s earning capacity to its purchase value), vacancy rate (a figure that helps you determine renting potential) and ad valorem (a tax rate calculation method).

Build a team

Complex transactions that commercial property purchases tend to be, you’ll need an expert team on your side guiding you as you make your way. You’ll need to retain an accountant, a mortgage broker, a commercial real estate attorney and a realtor who specializes in commercial property. For large commercial property deals, teams often include environmental advisors, notaries, tax consultants, engineers and appraisers, as well.

Understand the financing

From your personal credit to the credit of your business and lending institutions most likely to lend to you, you’ll need to put in some research to prepare to apply for financing when the time comes. In many cases, the sellers may be willing to offer financing, as well, and you will need to make a proper business presentation to apply. Here, too, you’ll need to put in some learning of your own as you work together with your team.

Take your time looking around

Since location and property type are both important to business success, you need to take your time scouting.  Not only do you need to look for the best possible location for your business, you need to put in some investigative effort determining the purposes to which each property on your list may be put, going by local zoning laws. You will need to learn about current use, rent potential, tax burden, fix-up costs and major changes expected in the neighborhood. A good choice of property also needs to make good business sense. It’s important to ensure that you can expect to be in the black each month once you account for principal, interest, tax and insurance (PITI).

Perform due diligence

Before you sign on anything that commits you to buying a location, it’s important that you first complete investigating the property. Order an American Land Title Association survey to learn about things such as improvements made in the past, boundary lines and easement access rights.

Don’t make these mistakes

If the purchase agreement requires that the seller complete improvements before the sale, it needs to be in the contract. The penalty for violations should be clearly stated, as well.

It’s important to make sure that the penalties imposed on you are reasonable ones, in the event that you need to back out of the deal at any point.

With commercial real estate deals, it’s critical that you go when with your eyes open. The environment tends to not be forgiving of mistakes.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Posts

Business12 hours ago

Can You Use Residential Property for Commercial Use

Having extra income, constantly flowing in can make all the difference in the current economy. Getting creative with how you...

What Do Business Consultants Do What Do Business Consultants Do
Business1 week ago

Running a Business? How to Minimize Supply Chain Issues

Supply chain issues have always been an issue for businesses but over the last few years, the effect and widespread...

Home Improvement2 weeks ago

How to Increase Your House Value Before Selling

Increasing home value is the first step to making your place more attractive for future buyers. Whether you are trying...

General3 weeks ago

Why Calorie Control Is Still The Best Way To Diet

There are a great deal of different options when it comes to dieting, every day there seems to be a...

The Benefits Of Trade Credit Insurance For Your Business The Benefits Of Trade Credit Insurance For Your Business
Business4 weeks ago

The Benefits Of Trade Credit Insurance For Your Business

Trade credit insurance provides cover for businesses who trade on a credit basis. If the people who owe money for...

5 Charming Restaurant Decor Ideas In 2022 5 Charming Restaurant Decor Ideas In 2022
Miscellaneous1 month ago

5 Charming Restaurant Decor Ideas In 2022

Making your restaurant memorable and stand out is a feat worthy of praise. The sheer pressure of wanting to succeed...

Bank Won't Fund Your Business? 4 Loan Alternatives To Get You Started Bank Won't Fund Your Business? 4 Loan Alternatives To Get You Started
Business2 months ago

Bank Won’t Fund Your Business? 4 Loan Alternatives To Get You Started

Businesses typically require some sort of collateral or proof of concept before funding their business venture. However, it is possible...

Planning A Stag Do Planning A Stag Do
Miscellaneous2 months ago

Planning A Stag Do

If you’re a Best Man then you’re in a unique position of responsibility, and before the day itself when you’ll...

Tips to Reduce Eczema Flare-Ups Tips to Reduce Eczema Flare-Ups
Health2 months ago

What Triggers Eczema | Tips to Reduce Eczema Flare-Ups

Eczema is a skin condition that can induce redness, itchiness, and skin inflammation. Its root cause is not fully understood,...

Women's Fashion Trends To Expect In 2022 Women's Fashion Trends To Expect In 2022
Lifestyle3 months ago

Women’s Fashion Trends To Expect In 2022

A new year means new fashion trends. We cannot wait for what is in store in 2022. It seems that...

Home Makeover Trends: Insights from The Pros Home Makeover Trends: Insights from The Pros
Home Improvement3 months ago

Home Makeover Trends: Insights from The Pros

Are you considering a home makeover but don’t know where to start? You’re in luck! In this article, we will...

Interior Design Trends 2022 Interior Design Trends 2022
Home Improvement3 months ago

Interior Design Trends 2022

We all spend time pining over other people’s interior’s on Pinterest or Instagram, but with these trends, it’s easy to...

Top Commonly Overlooked Car Maintenance and Repairs Top Commonly Overlooked Car Maintenance and Repairs
General3 months ago

Top Commonly Overlooked Car Maintenance and Repairs

Maintaining a car is a huge responsibility. There’s a lot that goes into that given how complicated a machine it...

What Is The Difference Between Strata and Property Manager What Is The Difference Between Strata and Property Manager
General3 months ago

What Is The Difference Between Strata and Property Manager

Real estate is a diverse market, and as such, it can be hard to determine the differences between various types...

Sleek Home Upgrades That Will Luxe Up Your Life Sleek Home Upgrades That Will Luxe Up Your Life
Home Improvement4 months ago

Sleek Home Upgrades That Will Luxe Up Your Life

Sometimes we need a vast endeavor to make our home look extravagant and cheek but very often you can implement...

Categories

Archives

Trending