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6 Tips for buying commercial real estate

On Behalf of | Dec 11, 2018 | Real Estate

The family home will be most American’s biggest investment. However, many individuals and businesses engage in buying commercial property. The purchase of commercial property involves the same concepts as residential property, but there are often different issues. And while some will close a home sale without an attorney, it is misguided to assume one does not need an attorney for commercial property purchases, particularly ones involving large amounts of financing. According real estate veterans, these six tips can help headaches or even financial ruin:

  1. Identify the sector of your proposed purchase: Is the property multi-family, retail, office, industrial or mixed use? Each sector has its own set of details to evaluate to determine if the deal is a good one.
  2. Assess the issues tied to that classification: This includes both unique characteristics of the property as well as those tied to the sector. For example, industrial will have very specific issues tied to environmental liability.
  3. Hire a structural engineer: Much like taking a used car to a mechanic before buying it, hiring an engineer will give information about the safety and longevity of a structure. Engineers look over surveys and other reports. They will also evaluate the quality of big-ticket items like the foundation, plumbing, roof, fire systems, HVAC, landscaping and more.
  4. Evaluate future costs: Property owners do not stay in business long unless they enter into agreements after clear-eyed evaluation of the risks. Review the real estate taxes, financial statements, utility statements and maintenance history.
  5. Check the title and permits: Ordinances will vary by jurisdiction. Do a title search to see if there are defects that could lead to disputes. The process can take weeks or years, so be prepared to discuss this with the seller.
  6. Have financing lined up: As with any major purchase involving a loan, it is best to figure out the financing before sending a letter of intent. Delays caused by not having finances in order can lead to the deal falling through.

Legal guidance takes out the guesswork

Attorneys with experience handling commercial property transactions can be a tremendous asset to buyers and sellers. They can help clients avoid unnecessary disputes and even offer an unbiased opinion that will benefit their clients today and in the future.