Buying a property can be a great investment for you. However, just like in any form of investment, commercial real estate investment mistakes can prevent achieving your goals. We bring you the list of common commercial real estate investment pitfalls you must avoid.
1. Commercial real estate investment in one’s own name:
One of the commonest commercial real estate investment challenge is mentioning one’s own name. Business entity’s name should be mentioned instead of one’s own name. Since commercial properties are high on liability, it is better to avoid being held responsible.
2. Incorrect assessment of space needs:
One of the other most common commercial real estate investment mistake is not providing for expansion. Running out of space means lower productivity which can force a business to move and prove costly for it.
3. Background check on prior uses of the property
This is a must to avoid commercial real estate investment challenges like environmental issues.
Opt for buying a commercial real estate property when the business is new.
Don’t opt for a commercial real estate investment when the business is not ready for a financial investment. Rather than investing in a building, it is better to invest in brick and mortar.
4. Not remembering to take occupancy licenses
Avoiding this commercial real estate investment mistake is a must. Just because a building seems ready, it may not be until all the licenses are ready. Remember to take all such licenses.
5. Checking zoning ordinances
Be thorough with zoning ordinances and current land use in regards to the intended use of the property. Failure to do so may result in violations which may not help with the intended use of the property.
Commercial real estate investment pitfalls of investing in a property that is hard to liquidate
Can be plenty. Why? Circumstances change and financial conditions can also change considerably. So, invest in properties that can be readily liquidated.
6. Choice of location
Analysing the neighbourhood and traffic conditions is essential along with facilities. One of the greatest commercial real estate investment challenge is choosing a good location.
7. Rights vs As Is Clause
Pertinent to know your rights vs As Is Clause. Though the seller may not be required to disclose everything, a buyer needs to know the nuances and can take legal recourse if certain issues about the property haven’t been disclosed.
8. Going by public listings information
Another commercial real estate investment mistake is relying on just public listings information as the only source of information. Since it limits the information, it is better to find a knowledgeable broker who knows information that are not listed publicly.
Time and shopping for commercial real estate loans need to be planned ahead of time for providing for exigencies. Also, don’t let emotions rule the decisions as that can prove costly.
Think ahead of time and not look for short-term stay. It is also important to align business strategy with real estate decisions. Overlooking upfront and ongoing costs can be one of the costliest commercial real estate investment pitfalls.