Investing in commercial real estate is a significant decision, and it can be a complicated one, too. If you've never purchased a commercial property before, you may not realize how different it can be compared to residential real estate. Here are some of the things that you need to be prepared to address or consider when you're dealing with commercial real estate investments of any kind.
Understand That Some Properties Are Multi-Business
One of the things that you'll find with commercial properties is that far more commercial properties are multi-tenant compared to residential ones. It's common for a commercial property to have office space for more than one business and, sometimes, for many businesses. Make sure you think about what you're hoping to get out of your commercial property investment because a multi-business unit could give your company the opportunity to add a revenue stream by leasing out the other units. Alternatively, you may feel that your business would be better served by independence, so you might want a property that's a single structure.
Schedule A Commercial Appraisal Before You Finalize The Deal
When you think about an appraisal for your commercial property, you may assume that the process will be like the one for the home you bought. You may be surprised to find out that a commercial property appraisal is actually very different. Commercial appraisals take a different approach because these properties are valued based on capitalization, including replacement cost and the rate of return. Make sure you understand the language of the appraisal so that you choose a property that will serve your company's financial status as well as it does the functional one.
Consider Environmental Assessment Requirements
Depending on the industry that your business is in, or the industry of the prior tenants of the building, you may also have to have environmental impact assessments completed for the property. This is important because any kind of environmental hazard or mitigation need should be addressed as soon as possible if you invest in the property. Further, if a prior tenant of the property has caused any damage, you'll want that documentation so that you can seek restitution and recovery.
These are some of the most important things to know about commercial real estate investment. Talk with an agent near you today for more help and to find the commercial property that is the best fit for your business.
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19 August 2022
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