Mistakes to avoid when buying a commercial property
Category Advice
Nobody wants to buy the wrong property for their business. But it does happen, and to the best of us too. There are a number of mistakes that could have any number of effects on your business' growth, stability and profitability.
As a commercial buyer, you want to make a good choice the first time, armed with the right information and ready with the right questions. The ideal property should not only suit your current business needs, but should also give you room to adapt and expand.
So, how can you prepare yourself for any potential pitfalls in your search for your future business premises?
Here are some mistakes to be mindful of when buying commercial real estate
1. Choosing the wrong location
You may have found the premises of your dreams, but if it's in the wrong location you could be in trouble. Location is about so much more than a nice address. You also need to consider:
- Surrounding areas and infrastructure
- Proximity to essential services and amenities
- Accessibility for staff, suppliers and clients
- Space to grow and expand
All of these factors will influence whether staff stick with you when you move, and how well you are able to service your clients.
2. Not considering the future
We don't know what the future holds, but in the property world it is always wise to consider the 'what ifs' and the 'could happens'. Risk forms part of any big decision and property purchases are no exception. If you're not thinking about the future as well as the present, you might face some surprises down the line. Make planning a priority before you start your property search.
For example:
- Are you aware of any other major property developments in the future that could affect your business?
- Would you be able to afford the monthly payments if something unexpected happened?
- Would the property be able to accommodate any rapid growth should your business start booming overnight?
- Does the property suit your business plans for the short term and long term?
Having a plan in place for every possible outcome will help you decide if a property is right for your business.
3. Bad budgeting
Purchasing a commercial property without considering all the other costs that come with it is a big mistake. Make sure your budget has plenty of breathing room for other expenses, such as:
- Emergencies or disasters
- Months without tenants
- Repairs and maintenance
- Legal and administration fees
Having enough cash as a down payment isn't enough and it's not wise to lean on a loan entirely. Banks want to see that your financials are stable before they approve your loan. Sticking to a detailed budget is key.
4. Not inspecting the property closely
This could be one of the biggest mistakes you could make when buying a commercial property. Be sure to inspect the building very closely for any faults and fixes that need to be sorted out before you buy. Discovering them afterwards could be disastrous and may throw your budget off as you tend to the problem areas. Be mindful of:
- Leaks and water damage
- Cracks and structural damage
- Mould and pest infestations
- Electrical and wiring faults
If there are issues that you are willing to take responsibility for, ensure that all decisions relating to the state of the property are noted in writing.
5. Tenant issues
If your property rentals are too expensive or not right for your target market, you might not generate enough interest to fill those spaces. This means that your vacancies will sit empty for a long time while your profits go toward those ongoing monthly expenses. Try and see your property through your potential tenants' eyes:
- What are my tenants needing in a commercial space?
- Is there enough parking?
- Is there adequate security?
- Is the location near public transport links or near major highways?
- Is there access to essential services and convenient amenities?
Need help on your commercial buying journey?
We have helped countless clients find their dream business premises and we would love to do the same for you. Let's set up a coffee to discuss your needs and arrange some initial viewings. Contact an SAproperty.com agent near you today!
Author: SAProperty.com
