Buying Tips...

Whether you’re looking for the perfect storefront or an apartment complex to generate some extra income, commercial real estate can be a solid investment.

Commercial real estate is potentially any real estate other than a single-family home. The term generally applies to office buildings, apartment complexes, retail properties, warehouses, educational buildings, and manufacturing facilities.

Commercial real estate can already have a business on it, like a gas station or a restaurant. It can also be unused space, like a vacant lot or mini-mall.

Determine Your Commercial Real Estate Goals

Buying commercial real estate can be a good way to invest your money. Most people start buying commercial real estate for one of the following reasons: a specific business use, extra rental income, or to build equity.

Run a business with commercial real estate

Some people buy commercial real estate with a specific use in mind. They want to open a store, restaurant, or bar and need a place to put it. Buying the property can provide definite benefits over renting, including building equity and the ability to manage your commercial real estate space without restrictions from a property owner.

Earn extra rental income with commercial property

People who buy commercial property are also often looking for some extra income. Whether you’re interested in buying a duplex, an apartment complex, or a mall, renting out your commercial real estate space can be a great way to earn some extra money. In a growing market, where real estate prices are rising, someone else is helping you build equity. If you rent out half of your duplex, your renters are helping you pay your mortgage and build equity. Be sure you understand all of the economics.

Build equity with commercial real estate

Equity is the value of the owner’s share in a property. When you finance a large sale commercial real estate purchase, you’re borrowing the money from the bank and slowly paying the bank back. With each dollar you pay back, that much of your equity is growing. Think of it as the ultimate piggy bank, where every dollar you put in gives you a little more of the property. And if your commercial real estate property appreciates, that single dollar can end up being worth more than a dollar. As the value of your commercial real estate property increases over time, so does your equity.

Plan Commercial Real Estate Investments

No matter what kind of commercial real estate property you buy, real estate appreciation is usually a slow process. You’ll need to make a solid plan and account for potential problems.

Pick the right commercial property

Before you can decide what kind of commercial real estate property you want to buy, it’s important to take into account your skills, ability, and the amount of time you want to put into it. If you can afford a 10-unit apartment complex but don’t have the time (or the stomach) to deal with 10 different tenants, then maybe a duplex is more your speed. If you’re a do-it-yourselfer, then maybe you can buy a fixer-upper and make more money by doing the work yourself.

While the value of commercial real estate property can be averaged over a large area, each market is unique. Spend some time walking around the neighborhood. What is the rent of other similar commercial real estate properties in the area?

Tax and investment goals

Consult an accountant and make sure you structure your investment to meet your tax and investment goals. There are many commercial real estate books available to help you learn more about buying commercial real estate property and how to make it work for you.

Find Commercial Real Estate

Once you know what type of commercial real estate you want, contact us and we will find it for you. We take pride in our ability to find exactly what you are looking for. If we cant find your type of property in our network then we can market to existing property owners to find a prospective seller.  

Buy Commercial Real Estate With Confidence

The information contained in this Buying Guide is intended for general information purposes only. This guide is not intended to be a complete list of all things relevant to the purchase of commercial real estate and should not be deemed a substitute for professional advice. You should conduct your own due diligence into all aspects of a commercial real estate purchase and depending on your situation; you should get assistance from experts, including a licensed Realtor®, a property inspector, title/escrow company, attorney, and/or financial advisor.

Before moving forward with any real estate purchase, you’ll want to consider the following.

Real estate purchase specifics

Before making your purchase, make sure you know exactly what you're buying, research your seller, and understand your payment options.

Know your purchase

Carefully read the details in item listings.

Know your seller

Research your seller so you feel positive and secure about every transaction.

Due diligence

As with all major decisions, in buying commercial real estate, you will want to make sure you get full information and the best advice possible. You may want to consider using an experienced commercial Realtor® who can help you with your due diligence, negotiations, and closing. Depending on your personal circumstances and investment goals, you may also want to engage an attorney and/or a tax advisor.

Choosing a Successful Location for Your Business

Here's how to choose affordable space for your business that suits your company's needs.
Because there's no universal rule for choosing a good business location, it's important for every business owner to figure out how location will (or won't) contribute to the success of the business -- and to choose a spot accordingly. While there are many issues to consider when you're looking for space to house your business, make sure you ask yourself these four important questions:

Is Location Important for the Success of Your Business?

For some businesses, the classic advice "location, location, location" is right on the mark -- location can mean the difference between feast or famine. But for other enterprises, location may be much less important than finding affordable rental space. In fact, location is almost irrelevant for some businesses: service businesses that do all their work at their customers' locations (such as roofers and plumbers) and businesses that have little contact with the public (such as mail-order companies, Internet-based businesses and wholesalers). If these types of companies can pass on rent savings to their customers, picking a low-cost spot in an out-of-the-way area might be an advantage.

What Type of Location Is Best for Your Business?

The key to picking a profitable location is determining the factors that will increase customer volume for your business. Ask yourself questions such as:

Keep in mind that different types of businesses attract customers in different ways. One key distinction is foot traffic versus automobile traffic. For example, if you're opening an urban coffee shop, you may assume your customer volume will be highest if there's lots of pedestrian traffic nearby during the hours you plan to be open. On the other hand, for an auto repair shop, the choicest locale is a well-traveled street where the shop will be seen by many drivers who can easily pull into the lot. Also consider whether it would benefit your business to be around similar businesses that are already drawing the type of customers that you want. A women's clothing store, for example, would no doubt profit from being near other clothing shops, since many people shopping for clothes tend to spend at least a few hours in a particular area. Ultimately, the perfect location for any business is a very individual matter. Spend some time figuring out the habits of the customers you want to attract, and then choose a location that fits.

How Much Rent Can You Afford?

Chances are that you'll rent rather than buy a space for your business. After all, most small start-ups don't have the funds to purchase real estate, and it's usually not a good idea to saddle your business with high interest payments in any case. One obvious and important concern when looking for commercial space to lease is finding a place that you can afford. When you projected your financials (as part of your business plan), you should have estimated how much rent your business would be financially able to pay each month, given its projected revenues and its other expenses.

How to Determine the Average Rent in Your Area
Brokers and agents are great sources of information on rental costs in various neighborhoods. They'll generally give you an average figure for the cost of commercial space per square foot per year in a given area. Once you have this figure, you can compare it to the costs of other spaces you're considering. If you haven't already, research average rental costs in your area to make sure the amount you budgeted for rent in your business plan makes sense given the cost of commercial space in your area and how important location is for your business. For example, if you determined that location is very important to your business, make sure your budget will allow you to rent good space given the average cost of space in your area. If not, you may have to rework your business plan.

Is Your Proposed Location Appropriate for What You Plan to Do There?

When choosing business space, the biggest consideration is sometimes not where it is but what it is. The building facilities need to be appropriate for (or adaptable to) your business. For example, if you're planning to open a coffeehouse, you need a place with at least minimal kitchen facilities. Unless you can convince the landlord to put in the needed equipment -- plumbing, electrical work and the rest -- it's highly unlikely that laying out the cash to do it yourself will be worth it. In short, if a building lacks something major that is essential to your business operation, you should probably look for something else.

Communications Wiring

Another consideration that's important for many businesses these days is having modern phone and other data lines into the business. When you're considering a specific space, ask the agent or the landlord for information about communications wiring, such as whether the space is connected to a fiber optic network or is wired for DSL or a T1 line (high-volume Internet connections). Also, find out to whom the landlord has sold the rights to the risers (wire conduits) in the building. A commercial landlord cannot enter into exclusive contracts with a single telecommunications provider such as MCI or AT&T. However, to bring in another provider of your choosing could be expensive.

Electricity and Air Conditioning

Besides high-tech communications wiring, don't overlook plain-old electrical power as an important consideration in choosing a business space. Make sure that any space you're looking at has enough power for your needs, both in terms of the number of outlets in your space and the capacity of the circuits. If you'll be running machinery or other electricity-hungry equipment, make sure to find out from the landlord how much juice the circuits can handle and whether a generator is available during power outages. Also, if you'll keep sensitive computer equipment at your office, ask the landlord how many hours of air conditioning are included in the terms of your lease, and negotiate longer hours if necessary.

Parking

Another common need for many businesses is adequate parking. If a significant percentage of your customers will come by car and there isn't enough parking at your chosen spot, it's probably best to look elsewhere. In fact, the city planning or zoning board might not allow you to operate in a space that doesn't have adequate parking.

Zoning Rules

Finally, the location that you choose needs to be legally acceptable for whatever you plan to do there. A certain spot may be good for business, but if it's not zoned for what you plan to do, you're asking for trouble.

You should never sign a lease without being sure you'll be permitted to operate your business in that space. Your city planning or zoning board determines what activities are permissible in a given location. If your zoning board has a problem with any of your business activities, and it's not willing to work out a way to accommodate your business, you may have to find another space.

Disclaimer
The information provided in this website is deemed reliable, however it is not guaranteed. The accuracy of all information regardless of source, including but not limited to square footages and lot sizes, is deemed reliable but is not guaranteed and should be independently verified through personal inspection by and/or with the appropriate professionals.