November 17, 2019
3 Things you shouldn’t compromise on when buying a commercial property
Buying a commercial property can be quite tricky especially if it is your first time. Most of the time people get themselves into twists during or after a purchase because of compromising on a number of key aspects.
It is always advisable to create room for flexibility when conducting any business. However, not everything can be compromised. Sometimes it is important to maintain a strong ground especially for these three things; negotiation, budget, and diligence.
The only reason you went on to buy the asset is that your evaluation was satisfactory. This is why you should aim at getting the best out of the offer when purchasing a commercial asset. If certain needs aren’t met, then you are better off not buying the property.
We will go through 3 things you shouldn’t consider compromising on when purchasing a commercial asset.
1. Your budget
When purchasing commercial property the first thing you should be conscious about is your budget. It is important to always stick to your budget. This will give you more negotiation power with the seller because you will not spend more than you had planned for.
Your budget has to cover more than just the purchase but also include other costs such as due diligence, moving, renovations, tax among others. During the purchase, hold your ground on the amount you had set aside for the asset.
You should also avoid compromising on repair costs. You should not spend too much money on repairs. Avoid negotiating on the repairs and let the vendor account for that. Spending too much on repairs means you have little or no money left for renovations.
2. Your needs
The most important aspect of the property you are purchasing is the fact that it is the solution to your needs. If you want to get the best out of an offer, you should always have your needs in mind when buying the asset.
This way you can see what you need from the asset and what you don’t need. If the positives are more than the negatives, you can improvise on what is missing. However, if you are lacking important features from the deal, it is better to avoid it.
Compromising on certain issues will not only cost you more on compensation but will also cost you a part of your business. If you miss a major part, this means you will not do a certain part of your planned business as planned. If your needs cannot be fully or at least sufficiently met by the asset, opting out early enough will save you a lot.
3. Due diligence exercise
This comes as you finalize the purchase. Before you close the deal, do a thorough due diligence exercise. A comprehensive due diligence exercise keeps you off unnecessary trouble and future costs.
Make sure you ask for the tax statements, utility bills, permits, a list of recent repairs and capital improvements. This way you can determine the quality, dos, and don’ts of the property. Also, ask for any assessments done on the property and confirm the validity.
When doing the due diligence exercise, avoid compromising on any issues identified. Compromising on major issues you identify might make your bank refuse to provide financing for the asset after reviewing it.
Commercial property is one of the best investments to venture in. Whether buying or renting, you should be precise and cautious before completing the transactions. Maintaining a flexible and open mind will give you a lot of options when buying a property. However, you need to keep in mind that you should get the best out of the deal.