October 18, 2019
5 Things to Watch out for When Buying a Commercial Property
It is important to evaluate the different risks involved in commercial property purchase before deciding to buy one. Do not fall into situations where you can get better results by renting rather than buying the same property. Each risk should be carefully considered using the available mitigation measures and should not be ignored as it may not affect your business in future. Below are some important factors that ought to be considered before buying commercial property.
This is always the first question. Of course, you want to be closer to your customers, but it depends on the type of investment you are considering. For example, you can say that you are investing in a café. Obviously, it is better to have customers all day so you’ll have to have your café’ strategically placed. Likewise, if you choose an industrial investment, it is better to place it in an industry related area.
Parking is important. Employees (or tenants) need to have easy access to the car park and so should your customers. Depending on your industry, you may also need ample temporary parking spaces and enough space for incoming and outgoing freight. In addition, it should be noted that parking is an important factor to consider when applying for local government approval on commercial property activities.
Activities that require investment require a budget plan before they can be executed. The same goes for commercial properties for sale. For investors, it is important to establish a budget allocation for asset costs in every commercial property transaction. This also makes it easier to choose a commercial establishment from the available options. However, if you do not have the full amount for the investment, you can pay a small down payment amount and then use the remaining amount for the mortgage.
Energy Efficiency & Environmental Factors
As national utility rates increase, energy efficiency and operating costs have become an increasingly important aspect of modern business. Does the property have solar energy? Is there a possibility to increase the number of solar panels to capitalise on energy efficiency? Where do you find water? Is there a problem with the launch or the sound limit? Visit the Victorian Environmental Protection Agency site for more information on other potential factors to consider for commercial properties for sale.
Of course, due diligence must be exercised in the purchase of any property and you can make recommendations or preparations if the due diligence is satisfactory. Have a qualified expert inspect the building to identify any defects or potential problems that could cause unforeseen issues. Make sure all parliament buildings are approved, check on the wiring and for electrical problems, and make sure there are no dangerous objects on the site. A professional will also help review drainage and sewerage maps, fire safety issues (if any), and place heritage and construction restrictions on the property. If there’s reason to believe that the property may be contaminated, it is worthwhile to obtain an environmental or pollution report.
Major Projects happening in the Area
Look for what’s going on around the area. Are there other developments in the suburbs? What about the new community infrastructure under construction? Major new projects in the area may indicate suburban economic growth, which can be beneficial for your business. If you are looking for an investment property, you will usually find that the development area is rented much earlier. In addition, they often require higher rental returns than undeveloped areas.
Before signing a contract, thorough due diligence should be undertaken to avoid potential risk and to proceed smoothly. You may need to visit facilities and nearby sites frequently to identify potential problems and adjust accordingly.
The market for commercial property sales has recently been taken over by agents. They have the expertise in this area and can choose the right property for you at a reasonable price in exchange.