Investing in commercial property provides a wide range of benefits that range from tax breaks and ongoing passive income to providing a unique space in your community.

It’s not as simple as finding a property and making an offer, though. There are many things you must consider before you purchase your first commercial building.


Your Investment Goals

A successful commercial property developer, Angelo Ingrassia from Rochester NY, will tell you that examining your investment goals is the first thing to consider before purchasing a building.

Are you interested in a building that’s ready to use right away or would you rather buy something more affordable and spend money renovating it to meet your vision? Are you interested in flipping the property or do you want a long-term investment that will benefit you well into retirement? You should also consider whether you want to be hands-on or prefer to hire a property management company for the day-to-day tasks. 

The Property’s Location

Property's Location

The location is another very important aspect to consider. When you find a building you’re interested in, consider what the rest of the neighborhood is like. Is it clean and welcoming? Are there businesses like the one you’re building in the area? Other location-based factors to consider include whether your tenants will have access to parking or other neighborhood services, what the market trends are like in the area, and whether zoning laws will prohibit you from creating the space you want.

Cost of Insurance

Regardless of where your building is, how large it is, and what you use it for, you must carry insurance for it since there is always a risk of fire, flooding, or other types of property damage.

Buildings that are older and have the outdated infrastructure or that are in neighborhoods with high crime rates are likely to increase your insurance costs. Consider whether the building you are interested in presents significant risk. Can you afford the higher insurance payments? If you aren’t sure, it’s a good idea to continue your search until you find another building with fewer risks. 

Financing Options

Financing Options for commercial property

Of course, unless you can afford to pay for the building out of your own pockets, you’ll need financing to make your commercial property ownership dreams come true.

Chances are you’ve financed a home or car before, so you probably already understand that the higher your personal and business credit scores are, the more likely you are to find financing options that meet your needs.

Experts recommend getting pre-approved before making an offer since the last thing you want is to withdraw an offer due to a lack of financing. Be sure to do thorough research into the types of commercial real estate loans, which include conventional mortgages, SBA 504 loans, bridge loans, and hard money loans. 

There is much to consider when purchasing a commercial property and it can often feel overwhelming for those who are new to the playing field. Don’t be afraid to ask for help. Working with experienced property owners, real estate agents, lenders, and insurance companies will help you to make the best decisions for your purchase.

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Arnab Das is a passionate blogger who loves to write on different niches like technologies, dating, finance, fashion, travel, and much more.

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