The world of commercial real estate is complex, but purchasing your first CRE property shouldn’t feel impossible. If you’re ready to take the plunge on your first property, here are 5 things you should keep in mind.
Establish Clear Goals
Make a list of property must-haves based on your business goals. Consider the following questions:
- What style of commercial building will you need? (Retail, office, commercial, industrial, etc.)
- Are you looking for a commercial space to run your own business out of, or simply an investment property to earn passive income?
- Which audience or customer pool are you targeting?
- What’s your budget? How much can you put up for a down payment and how much can you afford for monthly loan payments?
Location & Zoning
Consider if the location of the property is a good fit for your target audience.
- Is the property in a location that is desirable for potential customers or future business tenants?
- What is the property’s proximity to other business or retail centers, public transportation, schools, parks, or other local amenities?
- How is the property zoned? How do these zoning ordinances impact your long-term plans for the property? Do they limit you in any way?
Find Any Hidden Costs
A series of small, unexpected expenses can significantly impact your ROI in the long run.
- Think critically about any infrastructure damage that may be present on the property. Ensure you have a thorough property inspection by your broker and by a professional CRE inspector. What may seem to be a small issue now could end up costing you big in the future.
- Ask your broker to help you analyze how current inflation and interest rates will affect your overall returns. If your timeline is flexible, your broker may be able to advise on different strategies to maximize your investment.
- Are there any local regulations or tax implications that may impact your investment? Your broker should be able to help you navigate these issues.
- Consider how you want to handle property management. Do you have the time to manage the day-to-day management of the property? Or do you need to allocate funds for full-service property management?
Purchasing a commercial property is a major investment, so consider how the property could adapt to meet your evolving business or investment goals.
- How old is the building? How long do you hope to own the property?
- What types of businesses are currently booming in your local marketplace? Is this property well-suited to meet those marketplace demands in the coming years?
- Will you need space to expand operations later on?
- Can the property be easily refurbished or updated to attract higher-paying tenants in the future?
Partner with the Professionals
Finding the right property for your business goals requires building the right team of CRE professionals. Partner with a local broker, attorney, accountant, insurance agent, and, if needed, general contractor to help you feel confident as you take your next steps into the world of commercial real estate.
At NAI Mid-Michigan, our seasoned team of CRE can help you navigate the intricacies of the real estate purchase process while providing you with valuable knowledge about our local marketplace conditions. Contact us today to find out more about how we can help.