Buying Commercial Real Estate - Risk or Reward?



Posted: Tuesday, October 20, 2009

by
Waterfront Properties & Club Communities

For people who are in business, owning a building can make economical and practical sense. But this is a risk, and there are a number of things to consider before you leap in to a significant commitment.

As with most real estate purchases - residential or commercial - the best advice on where to buy is location, location, location. Is it storefront space on a busy downtown street? Is it a warehouse with ample parking and easy access for delivery trucks? Is it an organic chicken farm?

Before you sign the contract for a commercial building, do your research. Does this location have a lot of drive-by, or if required, foot traffic? Has the building changed hands often in a short period of time? Why is that? Perhaps it is not the right place for a business especially your business.

Shopping for commercial space

There are several steps to purchasing property for your business, and they are not much different from buying a residential home:

* One of the essentials is to get pre-approval from your bank. Not knowing how much you can afford wastes not only your time, but also your realtor's, and the prospective seller.

* Be organized with your paperwork the lender will require forms (such as the SBA 504). This not only saves you time in the long run, and as an added bonus, you could save a significant amount on interest rates.

* Consider using a down payment and extending the length of the loan to leave you with working capital.

* Make sure your realtor is familiar with commercial property sales in your area.

* You may want to purchase a single store for your operation, or a larger building and property. This would allow you the flexibility to lease a portion out to another company, at the same time you are building your business.

* Know your market. Are the demographics within a seven-mile radius of the building potential customers?. Would the average household income support your business? Are you in the correct ethnic district for your products? Is your business industrial based, and would your neighbors object to excess noise generated by operating your company?

No foreclosure haven

Commercial space could face foreclosure just as easily as residential property. Banks are no more likely to cut a break to commercial property owners than they are to homeowners.

If you are looking for a bargain price when purchasing some space for your business, keep an eye on newspapers or your ears open for companies that may be shutting their doors. The banks may be happy to hear from you to take the property off their books.

Visit WaterfrontPropertiesAdmiralsCove.com for everything to do with Admirals Cove Jupiter. You'll find information about a range of issues and properties in this beautiful area, including Homes For Sale in the Admirals Cove Golf Village.

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