So you began your business in your parents’ garage. Don’t be ashamed. After all, Steve Jobs started Apple computers in his parents’ garage.
He didn’t stay there, though. After a couple of years and successful builds and sales, Jobs and his partners moved to commercial property.
Moving from your stable garage to a stable office away from mom’s home cooking can look a little scary. Keep reading to learn the steps of how to buy commercial property.
Step 1: Know Yourself and Your Situation
Not everyone seeks to buy commercial property for their own business. Some people (perhaps you) want to purchase it for an investment.
If you’re interested in buying commercial property, then you need to walk into the transaction with the lens of a leaser or a landlord. What kind of business can you see in this property? Who do you want to lease to?
If you’re looking to expand your own business, keep in mind all of the things that matter to your business. What do you need for a location? Will you need parking spaces?
Also, consider the physical condition of the property and the limitations such as zoning or building codes. All of these elements should factor into determining a commercial property is right for you.
Step 2: Recruit Smart People (Who Know How to Buy Commercial Property)
Do not just start looking at every “for sale” sign you see on your commute home. Visit a real estate company that can help you with your specific needs.
Then, contact other smart people who know specifics about purchasing commercial property. In particular, find a mortgage broker who can help you find the best deal from the best lender.
Contact an accountant to help you go over your books and see if you can afford a property. An accountant will figure out the tax benefits for you and forecast an operating budget.
Contact your lawyer as well. You may need legal representation to help you navigate the paperwork as well.
Use resources such as the checklist at Property Metrics to make sure you have all of your documents you’ll need.
Step 3: Know Your Money Situation
Before you step foot on any property, know your budget. Once you start looking at commercial real estate, you’ll find yourself mesmerized by vaulted ceilings and beautiful front walkways.
If you understand both what you can spend and what amount of money you’ll qualify for at the bank, then you can begin shopping.
Step 4: Make Them an Offer (They Can’t Refuse)
Once you’ve found the perfect property for your needs, you can make an offer. But here’s where you lean into your experienced people–your real estate agent, your business mentor, and even your business team. They’ll help you come up with an appropriate offer and draw up the necessary paperwork.
At this point, you need your lawyer to draw up a letter of intent. This letter outlines the terms of the transaction.
Step 5: Dot the I’s and Cross the T’s
Ask your realtor and attorney about an ALTA (American Land Title Association) survey. This document provides boundary lines location of the main building including improvements, the location of secondary buildings, and the identification of easements.
At this point in the transaction, both you and the seller will agree on an escrow officer, a neutral 3rd party that oversees the transaction.
Take the Plunge
Consult and trust your experts, and then dive in. This article should give you some basics on what to expect as you journey into the world of how to buy commercial properties. In the end, though, you need to trust the experts around you.
Check out our blog for more helpful advice and information about real estate.
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