Tips to Buying Commercial Property

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3 Tips to Buying Commercial Property

 

If you are considering buying commercial property you might be wondering how buying commercial property differs from buying a residential property. As both a residential and commercial real estate agent in Fort Myers and a Lee County commercial real estate expert, Alec Salameh has the experience and knowledge to guide you through the process. 


If you’re new to commercial property sales, it’s important to know the differences between these and residential purchases. When starting off, there are three key components to buying commercial property that are important to understand. 

 

Understand The Property Types

Before purchasing any commercial property, it is important to understand the types of property available for sale and their intended uses. First off, commercial property is defined as property that is used for business purposes. Types of commercial properties can include multifamily residences, office buildings, retail space, industrial space, and hospitality properties.


Multifamily properties are used to provide housing to a tenant as a landlord. The size of multifamily homes ranges from a property with two units to large apartment complexes.


Office buildings include any building whose main purpose is administrative or other office work such as attorneys, realtors, or loan centers. The size of offices ranges from single-business offices to skyscrapers.


Retail properties are any type of storefront from fast food to shopping centers.


Industrial properties include large-scale warehouses or distribution centers.


Hospitality properties are buildings meant to serve businesses and leisure travelers such as motels, hotels, and short-term rentals.

 

Understand Your Investment Options

Before making any investment, be sure to know your options so that you can make the best investment decision. Consider the following investment options before buying commercial property: land banking, development, fix and flip, wholesaling, owner-occupied, BRRRR, or passive investing.


Land banking is when an investor buys large tracts of land with the intention to sell for a higher value as nearby developments expand the area. 


Development involves investing in raw land and converting it into a constructed property.


Fix and flip investment in the commercial industry is just like in the residential industry. Investors purchase property, renovate it, and resell it for a higher value.


Wholesaling real estate involves putting a commercial property under contract and then selling that contract to an owner-occupant or investor.


Owner-occupied commercial property is a property that serves as both the residence and place of business for the investor.


BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat which is a value-added commercial investing strategy.


Passive investing involves making the purchase decisions but letting someone else manage the business dealings.

 

Understand Who to Hire

Depending on what type of property and what type of investment strategy you are planning for, you will need to get other parties involved in the deal. You want to make sure that you are complying with all the laws, regulations, codes, and licensing requirements involved in your purchase. Parties to hire may include a commercial real estate broker in Fort Myers, a commercial real estate attorney, a commercial real estate contractor, and a commercial property management company.


Bottom line, do your homework. Buying commercial real estate is an involved but rewarding process. With the right team, you are sure to streamline the process!

 

If you’re new to buying commercial property, take a look at some of our tips to help make the purchase a little easier.