Purchasing commercial real estate can be more challenging than buying a home. Before looking for a commercial property, it’s important to do some due diligence. To help you get started, Berkshire Capital Finance has made a list of the five things to keep in mind before making a purchase.
Let’s get started.
Purchasing commercial property is more of an investment decision than anything else, and you can foreseeably see the price of that land go up as years pass if you buy it in the right location. Before making a purchase, be sure to assess its surrounding neighborhood and infrastructure.
Assessing the various factors that can affect your property’s value can help you avoid having to deal with potential problems in the future.
Unlike a home, there are varying classifications for commercial properties.
Class A buildings are typically categorized as office buildings, while Class B and C buildings are considered to have the highest level of risk.
Aside from office buildings, retail and industrial buildings have classifications. Knowing the classification of these properties could affect your business and should therefore be assessed critically before making a purchase.
Before you start looking for a property, it’s important to thoroughly inspect it to understand what it was used for and what wear and tear it saw before being put up for sale. Doing so could allow you to identify potential problems, such as asbestos or mold.
One of the most important factors you should consider is the financing options that will allow you to purchase the building.
Getting pre-approved is also a good idea to ensure you can afford to make an offer on the property. Having the help of an accountant can also help you figure out what you can afford.
Various commercial real estate loans can be used to purchase a property, such as a mortgage or hard money loan.
It’s time to close the deal once you’ve found the property you want to buy. At this point, the seller will typically ask for a deposit, which signifies that you’re serious about the purchase. This is more commonly referred to as earnest money.
Since an early deposit is usually small, the seller may request more money if the property is in a desirable location.
The earnest money is a credit that can be used toward the purchase. Even if the deal doesn’t go through, the earnest money can still be considered a refund. This is because the seller can still withdraw from the agreement if they decide not to proceed.
Getting the right experts to help you through the buying process can greatly increase your chances of securing the financing you need. Having the right team of experts can also help you spot potential problems early on.
Berkshire Capital Finance is a division of Eurolink Corporation International that provides debt and loan solutions to its clients. We specialize in providing long-term loans to investors in commercial property and second properties.
We provide various services to our clients, such as commercial and corporate term loans, bridge loans, equity release, and debt consolidation. We carry out due diligence on your existing loan terms and provide a price quote for your new loan. Contact us today to learn more.