Are you planning to expand your investment portfolio but are unsure how to go about it? It happens to the best of us. Research has shown that the pandemic negatively impacted many commercial real estate statistics, from property values to office space to sales.
Purchasing commercial real estate is more challenging than buying a single-family house, so doing your due diligence is one of the best ways you can make a profitable decision. Here are some common questions commercial real estate buyers have.
Understand Your Situation
One of the first things you should do is evaluate your circumstances and ask yourself what kind of property you’re looking for. Whether you’re investing in a commercial property for your business, building equity, or renting it out, the purpose of purchasing should be clear as it’ll help you decide the kind of location you need and whether you should buy the land or lease it.
Evaluate your financing situation so you know if you can make a down payment or if you need a private lender to guide you. Know the risk level that you can tolerate, the effort and time you can invest in the property, and whether you can invest in a particular scale are all important questions that you must ask yourself to decide on a commercial property.
Find Out Why the Property’s Being Sold
Before purchasing a commercial property, you need to know why it’s being sold. Checking from multiple sources can help you determine whether any legal and financial liabilities will be transferred to you from the last owner, including any hefty repairs and liens.
For example, a seller may be trying to get rid of a property because it isn’t functional or suffers from significant problems. You can also find out the level of risk associated with the building by knowing its classification. Office spaces are usually categorized as Class A, B, or C.
Class A properties pose the lowest risk level, while Class C presents the highest risk level. Knowing the building’s designation can help you assess what the property means for your business.
Inquire About the Property’s Features
By touring various properties, you can decide which one’s suitable for you concerning its price, location, use, and condition. Commercial properties situated near downtown areas or other service centers like hospitals, etc., sell quickly and have a higher value.
Since your needs and situation is unique, find out what the property’s currently being used for, its allowed and unallowed uses, the kind of rent it generates, and the types of taxes applicable to the estate. You should also inquire about which features need repairing or replacing and if the property is undergoing any major upcoming changes.
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