The world of commercial real estate can be a complex one, and each property can hold unique challenges. Because of this, it is essential that developers and investors be able to evaluate a property incisively. No matter the area or the type of property, there are a number of things that can make the difference between a property that boasts regular returns on investment and one that becomes an obstacle to financial success. Read on below to learn more about just a few of the most important things to keep in mind if you are ready to purchase a commercial property for sale.
Conservative Profit Estimates
Profit is almost never as simple as subtracting your expected expenses from your expected income. Net income can be a helpful ballpark figure to begin working with, but you'll need to factor in things such as tenant vacancy and management fees. If your commercial space is being renovated or is welcoming several new tenants in its first few months, then you'll also want to devote a significant part of your expense budget to advertising. Before you pounce on a property you believe will bring in record profits right away, be sure to consider all of the most important aspects.
Third-Party Property Assessments
While a seller can be an invaluable source of information about a property, it is unwise to rely on their information alone. To this end, be sure to hire a surveyor who can perform a variety of services. These may include but are not limited to screening legal documents, performing due diligence on past improvements undertaken by previous owners, and compiling a report of the property's overall condition. Without this information, you are less able to make an informed decision about a commercial property purchase.
Factor in Zoning Laws
Zoning laws are an overlooked part of commercial property evaluation, but they can make a massive difference in how you imagine your property will be developed. In short, zoning laws determine what you can and cannot do on a given property. Many properties are zoned strictly for residential, commercial, or industrial use. But properties that feature mixed zoning allow developers and investors to plan a combination of these, meaning space for cafes and restaurants can be rented out on a building's ground floor, with new apartments on the floors above. This flexibility can give a property far more potential in the long run, and should always be considered.