By Liam Thomas
Investing in a commercial property can be very rewarding. It helps in saving rental expenses and can also be a substantial asset for your business. You have complete control over the property, and you can renovate it at your will. However, buying a commercial property is not an easy task, and there are many variables involved. Given the sizeable amount to be invested, it is advisable to do adequate research before buying a commercial property. The research becomes essential if you are taking a business loan for it.
- Get Clarity on Your Motivation for Investing
You should clarify whether you are buying a commercial property for your own business or giving it out on rent. If you are looking out for a property for your own business, you may want a property that helps grow your business while also reducing your commute time. If you are looking to rent out a property, you will not mind if it is away from your home if it is giving a reasonable rent.
- Shortlisting Locations
Location is the most crucial factor when choosing a commercial property. Factors such as proximity to customers and access to public transportation can lead to immediate business gains. Other factors to be considered are vacancy. Going for a property with less than 5% vacancy can help in capital appreciation. However, a complex with a lot of vacant properties gives you good negotiating power.
- Quality of Building
A better-quality building can lead to higher appreciation. For example, a LEED certification represents cost-saving and environment-friendly buildings. Other factors determining the building’s physical aspects like materials used, the number of elevators, ceiling heights, etc. If it is an old building, invest time in assessing the physical condition of the building. You may also take the help of professionals to determine the physical condition. Investing a small amount in this activity can save from significant expenses in the future.
- Keep an Eye on the Layout
The layout of a commercial property can have a significant impact on the operational efficiency of a business. A well-planned design can help optimize space utilization while also setting aside some space for staff recreation. While assessing properties, it is better to clarify how you want your office to look.
- The Reputation of the Builder
The reputation and track record of the builder are essential considerations when buying a commercial property. If it is an under-construction property, you may want to ensure the builder’s track record of timely completion of projects. Also, the builder’s reputation helps in keeping an eye on the quality of construction. A reputed builder has their brand at stake and will ensure suitable quality materials for construction.
- Identify the Sources of Financing
You should put a lot of time into planning for the sources of financing. You should determine how much you are investing from your own and how much you rely on external funding. If you are opting for a business loan, check whether you meet the business loan eligibility criteria. You should also factor in the costs for various sources of financing.
Business loan interest rates can play a significant role in planning your cash outflows after buying a commercial property. Do your research to find the lowest business loan interest rates to keep your interest expenses in check.
