5 Tips When Buying or Leasing Commercial Real Estate

Buying or leasing commercial real estate is quite a daunting prospect if you’ve never done it before. The amounts are typically much larger than when purchasing a home, and there are many more details to attend to as well.

Here are 5 tips for buying commercial real estate successfully in the United States.

1. Get a Good Sense of the Local Market

A decision where to situate a new supermarket or lease an office building is affected by the local market for that area. Is it an ideal place to be situated, or is it a poor one? Is it up and coming, or going downhill – which explains the discounted price?

Local business owner, HoomanNissani, has completed several deals in California over the last two decades. He mentioned that “It’s beneficial to develop an understanding of the local market. This way, you know if the recommended location given by the realtor is a good one or not.”

2. Hire an Accountant

When you’re going to be dealing with real estate loans and the complexities of the U.S. tax system, then it’s advisable to use the services of an accountant.

An accountant who has experience working on the commercial real estate side can provide some insights into different financing options and how to best structure an acquisition to protect the company.

3. Don’t Rush into Deals

Trying too hard to find the perfect warehouse, vacant office or land to seek permission to build a new supermarket can lead to problems.

Selecting an office that’s not got a great location or is too small for an expanding business which will be outgrown within 6-12 months is going to be a mistake. It’s better to wait for another, larger office to come on the market and lease or purchase that one instead.

There is an element of ‘hurry up and wait’ with commercial real estate. Nevertheless, sometimes there are more vacant assets available later when waiting it out.

4. Get Help with the Legal Side Too

The legal questions are many when it comes to leasing or purchasing commercial interests. Unless you already have an in-house counsel, it’s necessary to hire a lawyer (preferably one with commercial real estate experience).

The legal and other issues that may crop up include potential insurance difficulties, investment risks, permits and title, and environmental factors to name just a few. For a more complete list and a realistic assessment, consult with an attorney to ensure the company isn’t stepping on a legal landmine.

5. Know Your Budget

It’s easy to go a bit crazy on price when another real estate is presented by a realtor that’s outside of the budget. For this reason, it’s important to set a range that’s acceptable and know what is too high. This way, a commercial realtor can be instructed specifically to only present relevant deals that fall inside these parameters. Buying or leasing commercial real estate is a stressful thing to do. It’s important to get it right the first time, so getting the right people in the team is extremely useful to avoid mistakes.