Important questions to ask before investing in commercial real estate
Whether it is for running your business or renting out, investing in commercial real estate can be a great idea. But, as with most things related to real estate, you need to tackle it with proper care. To help you out, we will go over some important questions to ask before investing in commercial real estate.
What to ask yourself before investing in commercial real estate
Before we go over specific questions, we first need to establish why you are investing in commercial real estate. While you should always try to find the best piece of real estate for the smallest amount of money, you must keep certain distinctions in mind. These are based on whether you wish to run your business from your new location or rent it out. With this in mind, we will separate the two into different paragraphs.
Investing for running your own business
One of the most important questions to ask before investing in commercial real estate for your own business is whether the property will improve it. As said before, there is hardly a commercial piece of property out there that is cheap. Therefore, you need to figure out whether your investment is worth the cost.
A good time to relocate your business is when it is picking up and when you know that it will benefit from the relocation. This requires a deep understanding of how your business functions and how your location and environment effects it. Aside from being expensive, know that commercial moving is often quite arduous and complicated. So, do yourself a favor and carefully consider whether moving your business is the right call. Know that if customers have grown accustomed to your current location, you will experience drawbacks from changing it.
Investing in order to rent out or flip the property
On the other hand, if you plan on renting the commercial space to other businesses, there are different aspects that you need to consider.
First, you need to analyze the area where the real estate is situated. Doing so will help you figure out what business potential the real estate holds. Plenty of businesses live or die based on where they are located. And even a block or two can make a world of difference. For instance, say that you are planning to purchase real estate in Austin. There is a reason why so many people are deciding to move there. With some research, you can find out that Austin offers numerous opportunities for people from all walks of life. But, you need to dig deeper and learn how those opportunities are spread. Only then can you make an educated decision on where to invest.
Secondly, you need to consider the interior of your commercial real estate. Apart from location, the interior is one of the most important aspects, especially when it comes to productivity. While commercial space does leave a lot of room for creativity, there is a limit to how much you can alter a particular space. So, do the smart thing, and try to predict the interior layout of the property before you purchase it.
What to ask the real estate agent
If you plan on dealing with real estate responsibly, you will have to hire a real estate agent. Sure, modern technology does allow you to do your research and even purchase real estate without one. But, having an experienced professional by your side is a must. Unfortunately, not all real estate agents are capable of helping you out, even though most will say that they are.
For now, we will assume that you’ve done all that is necessary to find a suitable real estate agent. What you need to do now is use their knowledge of the local area and the experience in dealing with commercial real estate and prepare a list of questions to ask before investing in commercial real estate. You agent will help you figure out whether your investment is a sound one.
What is the history of real estate?
If a piece of real estate catches your eye, you’d be wise to inquire about its history. Knowing what that real estate went through and why it is currently for sale can save you from potentially catastrophic mistakes. If the previous owner used real estate to run a business, try to learn why it failed. As we have mentioned, location can play a significant role in how successful a company is. So, try to understand what circumstances lead to that piece of real estate being vacant. If you lack the motivation to do so, keep in mind the great quote that person who doesn’t learn from history is bound to repeat it.
Are there any plans for the local area?
Another critical thing to remember when purchasing real estate is that neighborhoods change. Whether you like it or not, the area where you plan to invest in commercial real estate will change. Of course, no real estate agent can see into the future and tell you precisely what that change will be like. But, a good real estate agent that keeps track of commercial real estate trends can give you a pretty good estimate. By knowing this, you can both figure out whether your business will flourish in the new neighborhood. Or, if you plan on renting, whether you should expect companies to come and seek commercial space.
The weird thing about questions to ask before investing in commercial real estate is that the more you ask, the more questions seem to pop up. But, in actuality, this is good. If you ask before investing in commercial real estate, you will learn valuable information that should inspire you to analyze further. That further analysis will then bring more questions, and so on. All that we are saying is that the questions we’ve outline shouldn’t be seen as “all you need to know.” But more in light of “where to start” when it comes to researching investments in commercial real estate.
Guest Author bio:
Jake Dober has worked as a professional mover and moving coordinator for over 15 years. He now focuses on writing helpful articles for companies like Evolution Moving.com