Things to Inspect Before Buying Property

Posted by on Apr 13, 2016 in Blog - Commercial Investment Properties | 0 comments

Things to Inspect Before Buying Property

So you’ve found your dream investment property. It has a perfect view in a centralized location and the building seems to be in pretty good shape. Perhaps the real estate agent is tightening the clamps and wanting a written offer before you leave but, although you are in love with the , it’s still important to be vigilant. Way too many investors see a great spot at a great price without taking an extra day to inspect some crucial areas of the building and land, and failing to do so puts their profit potential in grave danger:

Roof Condition – the common sentiment about the roof of a potential commercial property investment is ‘out of sight, out of mind’. The truth is though many commercial buildings have a flat roof and thus a bigger potential for water to pool and leak so they should very much be inspected thoroughly before any purchase. You may still need to have the roof fixed, but that can come out of the initial purchase price.

Parking – the building, grounds, and location can be perfect but it won’t attract potential tenants if there isn’t adequate parking available. Businesses want to open up a building that their customers can access conveniently and nothing can drive away a perfect tenant like the property not having parking accommodations.

Electrical and Intended Use – before buying property you need to know what the intended use is going to be and specifically, the electrical requirements. Transitioning from a retail space to an office or manufacturing facility is going to likely demand an electrical system upgrade whereas alternative purchase options may be already equipped.

Air Conditioning – in our hot climate it’s especially key to inspect the condition of the A/C. You may be able to lower the price of the property if it is recognized that the air-conditioner is nearing the end of its life span – you’re potential tenants are going to demand it anyway so it’s best to take care of the issue at the time of purchase.

hvac cre Construction Needed – although the price may be right for your budget, you need to examine how much more work is going to have to be put into the property? Turning a retail space into offices for example is going to require a lot of framing, running electrical, plumbing upgrades, etc. If heavy construction is required you may need to either lower your offer or look for a different property.

Rent in the Area – every investor has a plan of how much ROI they can get from a commercial property. Unfortunately, the realistic numbers might not meet the numbers in your head so it’s best to survey local businesses of the similar industry and see what they pay for rent. You may need to change the type of industry the building will serve or find a location in a different district to meet your expectations.

Zoning Laws – another important issue that is often overlooked is local zoning laws. For example, potential tenants may want your building for an after-work cocktail lounge in the middle of a zone full of office workers but local ordinances may limit the sale of alcohol, closing times, neon signage, etc.

When looking for a commercial building it’s important to know what kind of money you want to make and what type of tenant you want to attract. Once you have these basics nailed down you can look for a location, a price, and inspect the building to make sure the property can be as successful as possible.

 

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