Understanding How To Buy Commercial Real Estate | alecsalameh.com
As you can probably appreciate, there are some differences to consider between buying residential property and commercial premises. When it comes to real estate investment, it makes sense to educate yourself on those differences. Understanding the process helps you find the right property, make a good investment, and continue growing your business.
Know the Different Types of Commercial Property
If you’re new to commercial property investment, you must understand the different property types available. Some of the opportunities you may find through a commercial real estate broker in Fort Myers include:
- Offices buildings
- Multi-family homes (apartment blocks)
- Retail stores
When looking at commercial properties, you should also keep in mind that each building will likely be zoned – meaning there are only certain things you can do with it. For example, you may find it impossible to convert an office building into a residential apartment complex. Understanding the zoning of the property that you’re interested in can make a big difference in your decision-making process.
Differences From Residential Property Purchases
It’s important to understand the differences between commercial property for sale in Fort Myers and residential property purchases. While the same basic principles apply to both types of property purchases, there are also significant differences, such as financing options, what you can do with the property, and other laws pertaining to the land or building you purchase.
The land where a house gets situated cannot usually be rezoned for any purposes other than residential. It’s not impossible to get the land rezoned or reclassified, but the process can be lengthy, complicated, and very expensive. This is why it’s generally best to purchase property that has already been zoned for commercial use if you plan to use it for your business.
If the property you’re interested in is already zoned for commercial use, but you need to have it rezoned to a different type of commercial use, this is generally a much simpler process.
Another notable difference between buying residential property and commercial property for sale in Fort Myers is the capital needed to invest. You will generally find that residential properties are significantly less expensive than purchasing a commercial property.
Because of the additional capital needed, you may want to consider building your commercial property portfolio, if you are new to commercial real estate. A commercial real estate broker in Fort Myers can point you in the right direction.
Property investors that buy a single-family home get a single revenue stream from it, irrespective of whether they “flip” that property or rent it out. When you purchase a commercial property, you have the opportunity for numerous revenue streams.
For example, if you buy commercial property like a shopping mall and lease each unit to different businesses, you’ll be getting the revenue from each business.
Few property investors have hard cash to purchase their properties. Most will take out a loan and repay it over time, similar to taking out a loan for the purchase of a house.
Commercial properties can represent a more considerable risk for lenders than residential loans. As you’re considering the purchase of commercial property, keep in mind that financers may ask a lot of questions, request to see a business plan, and need more assurances or guarantees before they agree to fund your property purchase. This is due to the high cost and potential risk associated with the loan.
Why Buying Commercial Property Makes Sense
Making the decision to buy commercial property isn’t always as easy as it looks. You may find yourself “on the fence” and unsure whether it’s a good idea. However, buying commercial property makes sense for a lot of people, and in a lot of situations.
Steadier Income Stream
Commercial properties provide a more stable income stream for investors than residential properties offer. There are a lot of reasons for this. Generally, there are very robust lease agreements with commercial property tenants. Turnover rates tend to be low with commercial properties, as well. On top of this, you may be able to get income from multiple different renters or tenants, depending on the type of property you choose.
You may be interested in buying a commercial property because you want to make wise financial investments. Investing in commercial property and learning how to buy commercial real estate allows you to make smart investments while spreading your risk.
Diversifying your risk helps you to minimize any financial losses. If one investment market crashes, for example, you can rely on another to keep you afloat. Branching into commercial real estate is a smart choice, especially if you already have investments elsewhere.
Property is considered the best way to increase your net worth. People will always need a place to live and businesses will always need the right premises. While real estate markets go up and down, depending on a number of factors, it’s safe to assume that investing in real estate is a beneficial long-term investment.
Questions to Answer Before Buying
When it comes to buying a commercial property, there are some questions you need to have answered before making any decisions:
Location Location Location
You need to determine that the location you’re considering is suitable for your needs. For example, commercial property for sale in Fort Myers is always sought-after because more people are moving to the city each year. As the city grows, so does the need for businesses, and the demand for commercial properties.
When considering location, there are several factors to think about. Of course, the city itself is important, but the actual physical location of the property within the city can make a property more or less attractive. The type of property you need can also play a huge role in what type of locations you look at.
It’s no secret that commercial properties are significantly costlier to purchase than most residential homes. With that in mind, ensure that you’ve got the funding to complete any commercial property purchases. When looking at different commercial properties, compare and contrast the affordability. While a property’s price may look attractive, it’s a good idea to try to find out if there are any issues with the land or building that will, in the long run, cost you more.
You may have the idea of the perfect property in your head, however, it’s not always easy to find that property. Make sure you know what your needs are, and look for properties that will fill those needs. If you end up with a property that lacks a feature that is crucial, but has some of the extras you wanted, you’re going to struggle with it in the long run.
Whether you’ve purchased commercial property before or this is a new prospect for you, we can help you navigate through it. We specialize in commercial real estate sales in Fort Myers, Florida, and the surrounding areas, giving you the experience and expertise you need to make your commercial property dreams a reality.