Buying your first commercial property isn’t as easy as you might think. Although it’s a lucrative investment option and a great way to expand your portfolio, it can also be complicated and costly, especially for first-time investors.
The commercial real estate market is constantly evolving, so there are new rules, regulations, and strategies to learn about every year. It is one of the fastest-growing sectors in the global economy, so if you want to grow your business and make a successful investment in real estate, you will need to get up to speed quickly.
Florida’s commercial real estate sector is one of the hottest markets in America right now. If you plan to invest your hard-earned money into Florida real estate this year, here are some tips to help you avoid common mistakes and make the most out of your purchase.
Not Planning Ahead
It’s important to have a game plan before you go shopping for a commercial property. You need to think about why you need the property and your goals for using it. You should also consider whether you want to rent it out or use it as a business location. Narrow your options by considering location, size, and price.
Make a list of what you want, and then do your research to see which properties meet these requirements. This will help you make a more informed decision and avoid wasting time looking at properties that don’t meet your needs. You also need to have a solid business plan and financing in place before you start looking for a property.
Not Understanding the Rental Market
Understanding your local rental market is an important piece of the puzzle. You need to do your research to ensure your property will be profitable, and you can do this by understanding the factors that affect the rental rates in your area.
For example, it’s important to look at vacancy rates, average rental rates, and other trends that may impact the demand for property in Brevard County. Doing this gives you a better idea of what to expect in terms of potential rental income, which will help set your budget.
Rushing into the Sale Process
When buying a commercial property, you need to take some time to think about all the pros and cons of each option so you can make an informed decision. Rushing into things can often lead to bad decisions and cost you money in the long run. You should consult a professional real estate agent and ask any questions you may have before deciding. This way, you can get a better idea of what to expect throughout the process.
An experienced realtor will understand what goes into finding the right property for you and will guide you through the process step by step to ensure you get the results you’re looking for.
Skipping Compliance Review
When purchasing commercial real estate, you must ensure the property meets all applicable compliance requirements. You can learn about these requirements by visiting your area’s local planning and development website. You can also talk to a real estate professional if you have any questions about compliance before you make your purchase.
Location is Key
Location is key when buying a commercial property. Target a location that has good potential for growth. Also, check that there are convenient transport options in the area to ensure easy access to your business for your employees and customers.
For example, if opening a deli or café, choose a location close to where people live or work. If you are opening a gym, choose an area where there are a lot of people. Also, check if the property meets any regulatory requirements for your business, such as fire and safety regulations for gyms.
High Repair Costs
Before buying the property, you need to determine the cost of repairs. Make sure you get an estimate from a qualified contractor to get an idea of how much repairs will cost. Also, check to see if any pending lawsuits could affect the property or decrease its value. You should also get at least three estimates for the work that will be required so that you can compare costs and choose the best person for the job.
Poor Cash Flows
You need to ensure that your cash flow can cover the costs of maintaining and operating the property in the future. This means you need to consider how much it will cost to maintain the building and pay the mortgage each month. You will also need to factor property taxes into your cash flow calculations.
You also need to consider the business’s overhead costs and verify that you can afford these expenses. A good way of calculating your cash flow is to use the net operating income divided by the property’s purchase price. This will give you an idea of whether the property is a good financial investment or not.
Ignoring the Hidden Costs
When buying a property, you must consider the hidden costs involved as well. These include legal and conveyancing fees, stamp duty, and the cost of building and pest inspections.
You can also save money by using the services of a mortgage broker to handle the mortgage application process for you. This will make it easier and less stressful since you won’t have to do everything yourself.
If you’re looking for a reliable and experienced commercial real estate agency for property investment in Florida, consider Realty World Curri Commercial.
They’re one of the leading commercial realtors in Brevard County. Through their extensive commercial property listings in Brevard County, you can find the property that suits your needs.