April 7, 2016
Maneuvering the commercial real estate market requires a roadmap of its own. Whether purchasing properties is a new venture, or you have experience under your belt, these tried and true do’s and don’ts can help you seal a deal that is best for your business goals and budget.
DO align your team of experts beforehand. Having trustworthy and dependent people on your side for the entire process can make all the difference. Objective opinions can be valuable when major decisions are on the line and experienced professionals can compliment your capabilities to ensure all bases are covered throughout each step of the process. From accountants and real estate lawyers to bankers and notaries, they all fill specified roles that leave room for error if not filled appropriately. Have peace of mind knowing reliable experts are ready and available to help when need be.
DO set realistic expectations. Dream big, but stay true to what is representative of what you can handle financially and professionally. Securing financing early can help you set parameters for what you are willing to spend on the property, renovations and upkeep. A clear business plan can also be useful to staying on course. As potential opportunities arise it can be tempting to alter expectations or compromise. Decide what terms are concrete and what terms are flexible and stick with them to avoid complications or buyer’s remorse when the dust settles.
DO your homework. It is vital to put in the work to become an expert on the property before moving forward with any purchasing decisions. Thoroughly explore all of your options and seek the opinions of a wide array of people who can bring further insight to the situation. Remember to carve out a generous amount of time to tour the property, and make multiple trips if you can. Take note of the surrounding area’s demographics, socioeconomic state and potential competitors and how they compliment your business plan. Consider the environmental issues that the area could be prone to, and make sure that the risks fall within your expectations. When it comes time to start making decisions, you want to be confident with the knowledge that you can bring to the table.
DON’T overlook small issues. When you are in the process of doing your homework, be careful not to overlook seemingly small problems. In some cases, properties may appear to have minor water damage that was said to be resolved, but ensure you have the whole story. Have a professional take a deeper look to confirm it truly was resolved and that damage is not greater than appears. Even hearsay about the location is worth validating with reliable sources. In the grand scheme of things, certain issues may seem trivial, however, they could potentially be the roots for a larger problem down the road.
DON’T rush. While time is of the essence, there must be an appropriate balance between expediting processes for efficiency and maximizing time for long-term assurance. Whether you are viewing the location, reviewing paperwork or processing the pros and cons, take a suitable amount of time to allow yourself to be thorough with each step of the process. Mistakes often occur when time constraints add pressure, so make sure you have adequate time to process all the details and weigh the implications of making a major decision.
DON’T hesitate to ask questions. Sufficient time also provides ample opportunity to ask questions that may arise sporadically. Leave no reason for reluctance or doubt as you prepare to move forward. Even if you think you may already know an answer, hearing it directly from the source can add weight to its authenticity. Asking questions opens doors for more conversations that can ultimately determine what course of action should be taken. Running subjective questions by multiple parties can also shed light on ideas and give you a more complete picture.
As you evaluate your current approach take note of how you can better position yourself for success by making sure the elements that are part of your strategy are moving you in a positive direction and not holding you back. For more information and further insight, contact your local commercial lending expert.
For inquiries, please email Mark Zink at zinkm at melrosecoop dot com or call him at (339) 293-5322.