Property can be a great investment, and commercial real estate can usually produce a better rate of return than a typical residential property.
As with any type of investment decision, you need to understand not only the benefits but also the likely risks involved to make an informed decision about your best option.
So, here’s some things you need to consider, to find a property that’s right for you.
Decide your mode of investment
Your first decision will be whether to buy, lease or rent a commercial property.
Your choice will depend on a whole range of factors such as: the type of property you plan to go for, what business sector you are in, how long you plan to stay at that location, how much flexibility you need to build into your development plans, and much more.
The restrictions and legal obligations which will apply to your business are mostly determined by your decision to own, lease or rent commercial real estate.
For instance, leasing a property may allow you to negotiate an advantageous deal where you are not required to pay out for upkeep and maintenance, whereas a rental agreement may be a little easier to terminate early if your plans change.
Be sure to ask for professional advice if you are unsure about which route to choose, because there could be serious consequences for your business if you make the wrong choice.
Choose the right location
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Whatever your business plans, most will be in some way location-dependent.
So, for example, if your business involves upmarket clients, then you will almost certainly need a premium location in a high-quality neighborhood. And that may mean renting if you can’t raise enough capital to buy in the area where you want to trade.
Location can also be critical when your business is aimed at certain kinds of customer. In which case, setting up near where your customers live or work will be essential. That means, of course, checking carefully that an area really does match your brand, and knowing that a business for sale in a certain location will guarantee you the foot-fall your business will need if it’s going to thrive.
And when you find a ‘dream location’, always ask yourself whether it meets your essential criteria, and whether you really can see your business in that area.
Making the most of your viewings
You may have narrowed down your options by thinking carefully about your business needs, but arranging viewings is a practical step towards homing in on commercial real estate which is really going to be viable.
Remember too that you will need to be properly prepared and well organized if you are to make the best use of any visit, and ultimately the right business choice.
It always makes sense to take someone else along. Another pair of eyes may confirm something you noticed but could also spot something you miss. It’s also easier, and more productive, to have a debrief discussion when both of you have viewed the property.
Don’t just focus on the interior. Not only the property exterior but also the adjacent district are likely to have an impact upon the success of your enterprise. And if you need professional help to make a judgment, be sure you can arrange for your adviser to be present at the viewing.
Use the time you have to thoroughly check out all you need to know. And never be railroaded into hurrying things to accommodate an impatient owner – it’s a huge red flag if you are being hustled through the process.
The condition of the property is important. So look carefully for cracks in structures, and also check for the presence of damp – usually a sign of underlying structural problems.
Where there is damp present, you may notice an unpleasant musty smell, see peeling wallpaper, bubbles and discoloration in the paintwork, and perhaps spot black mold on surfaces.
It’s important to take lots of pictures and/or videos you can study afterwards. This will inform your decision and also be helpful in identifying any issues which may need further investigation.
At this stage, you must also consider your future needs in detail. If you take on the property, will you have all the space you need for your business to grow and develop?
Other questions you must ask include: What do the other businesses do in this building? Who was here before? And why did they move on?
In addition, you should also find out about neighboring businesses, as well as transport links and any future developments planned for the area.
Once you have all the information you need, you will then be in a good position to make a clear decision about which property is really right for your business. Then it’s just a matter of submitting your offer and awaiting a response!
By Bruce Hakutizwi, USA and International Accounts Manager for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium size businesses. Bruce has over 7 years’ experience working within the US business transfer marketplace connecting buyers and sellers.