The commercial side of real estate is an appealing proposition for any investor in the UK. It can be a profitable move, as these properties usually offer higher returns than residential properties. Also, buying a commercial shop is different than buying a home. You are not looking for a perfect home that you wish to live in, but you are looking for a return on investment, which you would wish to increase gradually. If this is your first commercial property transaction, there are some important things to keep in mind, so you don’t end up in the wrong deal.
#1 Location of the Property
First and foremost, the location of the property plays an important role that decides the return on investment. A commercial property provides return through two ways – capital appreciation and rental. Both these factors are directly and heavily dependent on the location.
Hire a Real Estate Professional
Rather than doing real estate research and planning all by yourself, it is advisable that you hire a real estate expert to help you go through the process. They will help you figure out your finances, and suggest what properties you should invest in and how much return you can expect on your investment. Their knowledge will ensure a smoother investment process.
You should also consider consulting a real estate accountant and lawyer who can offer additional help regarding real estate transactions and legal formalities respectively. Moreover, you can hire a construction expert if your property requires significant work to be done. You also need a real–estate consultant or a broker who can help you put up your apartment for rent. If you are a resident of silicon valley city like San Jose, then the rate of apartments for rent in San Jose is pretty much high. So, it is very much important that your property is in a suitable location and that you get desired customers
A location that seems lucrative today might turn into an unwanted destination tomorrow. Although you cannot predict the future, but assess the past situations and current business flow in that area. At the same time, other factors that you should take into account are accessibility to the location, businesses around the property, proximity to public transport, parking space and so on. All these factors can either lower or raise the value of your property.
#2 Your Budget
An investment that needs money should have proper budget planning before execution. Once you have decided on the property you wish to purchase, it’s time to sort out finances. There are several financing options available, but the most feasible is getting a Bridging Loan in London. With bridging finance, you can arrange funds quickly for a short period.
However, it is critical to get approved before you make an offer. Also, if you are planning to take a bridging loan, make sure you have a strong exit strategy in place. When your finances are sorted, you can complete a real estate deal much easily.
#3 Property Condition
You have found your dream property in the most prime location, but have you evaluated its physical condition? Before you buy any commercial property, inquire about how old is the building? What was the purpose the building previously used for? This will help you get an idea about the wear and tear the property would have gone over the years and what repairs it might need in the future.
No matter if the property has all legal formalities done, you must inspect the property by physically visiting it. Check yourself if the property is in good condition and doesn’t have any problem with its strength. If necessary, hire a professional building inspector who can help you uncover the flaws that were kept away from you. After all, you cannot inspect a property like an inspector can do.
#4 Available Facilities
A property with state-of-the-art infrastructure is just great. But, it is always advisable to consider buying a property that offers some standard facilities and amenities. Facilities such as, lift, parking space, security, internet services and power backup should be carefully looked before finalising the commercial property.
Hence, check the available amenities and see if they match your requirements. These facilities will not only attract a large number of tenants or customers, but also help you get a better rental. In simple words, if you are looking for high returns, your property should provide as many amenities as possible.
#5 Documentation and Litigation Matters of the Property
Before buying any commercial property, make sure you do a thorough verification of critical documents and check legal implications. Every real estate transaction should involve a written agreement, title deed, property taxes, construction permits and utility bills. Make sure the property you are planning to buy is not under litigation.
Litigation can be stressful, which can take weeks, months and even years to resolve. Some examples of commercial litigation are breach of contract, real estate fraud and partnership disputes. In addition, if potential buyers find out about any dispute on your property, they may back out from the deal right away. Hence, ensure your property is free from any legal issues before buying.
#6 Limitation on Property Modification
In some situations, there are laws and regulations that restrict the owner to modify the exterior and interior of a property. It is essential to learn in detail about what modification is permitted and what is not. Remember that these restrictions may also prevent your tenants from making modifications according to their requirements.
Hence, learn about what property modifications are allowed in the property that you are planning to buy. If you are buying a property in a commercial centre, check whether they allow you to build stairs inside. If you are buying a standalone property, check whether government regulations in that area allow you to extend a floor. Make sure you get a good understanding of limitations to modify to avoid any dispute later.
#7 Hire a Real Estate Professional
Rather than doing real estate research and planning all by yourself, it is advisable that you hire a real estate expert to help you go through the process. They will help you figure out your finances, suggest what properties you should invest in and how much return you can expect on your investment. Their knowledge will ensure a smoother investment process.
You should also consider consulting a real estate accountant and lawyer who can offer additional help regarding real estate transactions and legal formalities, respectively. Moreover, you can hire a construction expert if your property requires significant work to be done.
Final Thoughts
Before you step into the real estate industry, you should find out what your ultimate goal is and what type of property you want to start with. Once you find out what you are looking for, determine how much you can afford and what financing options are available to you. Finally, look for the right people whom you can resell or rent. Thus, buying a commercial property can reap substantial benefits as long as you choose carefully. When in doubt, it’s always wise to consult an expert.
