If you are considering buying commercial real estate, you will see there are differences from buying residential real estate. You will most likely be required to put in at least 30% of the cost of the property in order to secure a loan as banks and other lending institutions will only provide loans for 60 to 70% of the property value. Every five to seven years, this market will undergo a big fluctuation.
Tips for buying commercial real estate:
- Know what you really need. What kind of property do you need? Do you have particular location needs? Do you plan to run a business there or lease it to someone else? If you are planning to open your own restaurant, for example, you will have different needs than if you plan to open a medical practice or if you are going to lease it to other businesses.
- Learn what you can about commercial real estate. Like every other industry, commercial real estate has its own lingo and vernacular. Learn at least a little of in. You do not need to become an expert but knowing a few terms will make the process easier for you and you will feel less lost when talking about it with your realtor. It will also make it more possible for you to peruse commercial real estate listings and get a sense of what is out on the market.
- See as many properties as you can. Find out as much as you can about each property you visit. What worked at each? What failed? What has it been used for in the past? The more you know about the history and performance of every property you consider, the better position you will be in to get a decent deal and secure the best commercial real estate property for your specific needs.
- You will need help. Commercial real estate sales are complicated and you will need to have some experts work with you. Make sure your team is the team you need. At the very least you will have to consult a commercial real estate agent, an accountant, a lawyer and a mortgage broker. More complicated purchases may require consultations with other professionals such as tax experts, engineers, security firms, etc. You should check with local officials to find out about zoning laws if you are changing what the property is being used for. If you are considering opening a medical marijuana dispensary, for example, there are a lot of restrictions on where that can be placed.
- How do you plan to finance this purchase? Take a real look at your credit and consider your options. Consider your bank and local credit unions, who are more likely to lend money for local, small businesses than larger banks. Talk to the seller about financing options. There are a lot of ways to finance a commercial real estate purchase.