When you buy commercial real estate, you may think you’ve made it big. Business owners and real estate owners all dream of the day when their strategies work and their business or real estate turns a profit.

Now is the time to take a deep breath. Investing in real estate is a big decision for anyone, but when it comes to the survival of your company, you need to be even more careful. It’s important to take the time to understand your commercial requirements and what kind of property will meet them.

Tips For Buying Commercial Properties

The following advice can assist you in selecting the right commercial property for your business.

Prepare for Your Search

It’s crucial to exercise due diligence when buying a commercial property. Before you start your search, make a list of all the properties you’d like to see. If you are working with a broker or real estate agent, describe what you would like to see in your property.

Be clear about the location of your property. Location is a key factor in any real estate deal. When it comes to commercial properties, location can have a big impact on where you can locate your business. For example, while you may be interested in purchasing land in a suburban area, zoning regulations may not allow an auto body business in that area.

Take your time when you go to look at potential venues. To avoid becoming overburdened with property visits, space out your inspections. 

Do a Thorough Inspection

Make sure you schedule a full day for your building inspection and research. As owner, you’ll be in charge of every aspect of the property, from the ground up to the roof. While a walkthrough is sufficient for a rental, it’s not enough for a full-time rental. You’ll want to do more.

When it comes to commercial and residential properties, the seller has a fiduciary duty to reveal all known defects of the property. That doesn’t mean they will be. If you purchase a property from a company or a real estate agent, the seller might not know about the defects.

They may have been covered up by the property manager on-site, or they may have become so common that they don’t look like defects any more.

Ask About Defects

As any commercial real estate lawyer will tell you, property defects are a thing of the past. Even though sellers are legally required to disclose all known defects, small defects can turn into big issues if you don’t know about them early enough to fix them.

Even if you win a lawsuit against an unethical owner or manager for failing to disclose a defect, it doesn’t necessarily mean your business will be saved.

Since you’ll be the owner of the property, you’ll need to fix or replace any defects once you sign the contract. Now’s the time to start asking the right questions. You’ll save yourself time and money down the line. Some of the areas where you can look for problems include:

Roof: When was the last roofing job done on the building? Try to get the roofing contractor’s name.

Walls: Check for mold or water damage. Inquire about insects or rodents. If possible, ask when the last time the building was tented for termites was.

Foundation: You could be interested in learning about earthquake retrofitting, sinkholes, or potential flood damage, depending on where you live.

Electrical damage: In older buildings, ask about any wiring problems, especially if there is more than one tenant.

Inspect the HVAC

It’s a good idea to take a closer look at your heating and cooling systems. You need to maintain a consistent temperature to keep your staff comfortable and healthy. The HVAC system is also more cost-effective if it’s properly maintained. There’s nothing like an inefficient AC unit to increase your electric bill.

Ventilation ducts and fans should be checked if your building is a manufacturing or assembly work facility. Know what tools and equipment are included in the sale, and what you will need to purchase to bring your building up to code.

Review the exterior

With more and more business services being offered online, you need to make sure your physical location is as attractive and easy to use as possible. The overall appearance of the building should be attractive and distinguishable from the surrounding landscape.

Ask if there are any exclusions in place that restrict alterations to the look or design of the property. Please note that if the building’s previous owner was granted a waiver or variance due to ADA violations, the waiver is not included in the deed.

Check on Permitting and Zoning

What are the building and business categories in a community, as defined by zoning laws? City councils and community planners create zoning districts to make towns and cities inviting places to live, work, and play. 

Zoning ordinances typically define communities as residential, commercial, or industrial zones. Some residential zones may also contain a small portion of commercial real estate, including shopping centers and office buildings. Light industrial space, such as auto workshops or small manufacturing facilities, may also be included in commercial zones.

While you’re searching for properties, make sure you’re researching in the right areas. Think about your business’s core mission and what other services you offer. For example, if you are a surf shop providing surf lessons and custom surfboards, you may wish to locate your shop in an industrial/commercial mixed-use zone.

Review Your Financing Options

There are ups and downs in the real estate market, just like there are in the business market. When it comes to commercial real estate and purchasing a building or piece of land, small business owners face a significant risk. Before you make a purchase, make sure you have enough cash flow and a bank account to cover your costs.

Make Improvements Part of the Deal

The term “build-out” refers to alterations to a building prior to a lease or sale. If you’ve ever rented property before, you’ve probably experienced build-outs. Build-outs can also be used as a lever when negotiating commercial real estate prices.

If you’re buying the property in its current condition, you’ll need to fix or rebuild what’s broken. This may be okay if you need the property as soon as possible. If you wait, you may be able to negotiate with the current owner to get the repair done at their expense and avoid the hassle.

Ask an Expert

If you don’t know what you’re doing, find a real estate professional who does. Before you sign the contract, have your building inspected by a building inspector. If you’re worried about the building, wiring, or a mold problem, contact a professional to help alleviate your concerns. Do it correctly the first time so you don’t have to repeat it later.

If you’re planning a significant renovation or remodel after purchasing the property, it’s a good idea to have an architect or engineer look over your plans and make recommendations. Getting the right team together can save you a lot of time and hassle in the long run.