3 Things to Consider When Purchasing Commercial Real Estate

An investment in commercial real estate can offer exciting growth opportunities for your business. Owning your own real estate will help build your stake in your business, as well as offer new potential sources of revenue. Ownership carries certain obligations as well, so it’s important to fully assess whether a real estate purchase is the right choice for your business.

Are You Prepared for the Obligations of Ownership?

The benefits of ownership are significant: control over your own physical space, potential new sources of revenue (like leasing to other tenants), and a broader, deeper investment in your business. But if you own commercial real estate, you’ll also be on the hook for its obligations: maintenance of a physical space, managing leases along with any problems that arise for other businesses, navigating zoning and tax issues that come with ownership, and more. 

If you are considering a real estate investment, you’ll want, first and foremost, to ask yourself if you wish to take on these duties. Will these burdens detract from your primary business? You may also consider hiring a property manager or a management firm to carry some of the weight for you.

How Will You Secure Financing?

There’s no way around it: commercial real estate is expensive, and will likely require one or several loans. If you’ve decided to buy, familiarize yourself with business lending options, of which there are many. These include traditional bank loans (which may require significant collateral), bridge loans (which generally have high-interest rates, but ultimately help carry you over into a more favorable loan), construction loans (oriented around structural improvements or new construction), as well as a variety of SBA loans.

It’s vital to shop around and work with your accountant to assess how much money you need, and the most favorable ways to obtain it.

What Type of Property Are You Seeking?

Ultimately, a commercial investment in real estate will involve a thorough search on your local real estate market for the right place. Make a list of things you need in a property, and things you want. Talk to local business owners and realtors, to best understand the market. Finally, thoroughly explore your city, town, and surrounding region, to learn the market for yourself and get a sense of what’s out there. Perhaps something more remote offers significant advantages in terms of cost, or maybe a larger property gives you the option to lease multiple spaces.

Whatever you decide, purchasing real estate will present a new and exciting venture for your business. Do the necessary research to ensure you’re ready for this next phase of business growth.

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