Investing in commercial properties can be a lucrative business, but it’s very important that you consult lawyers before going right into it. Purchasing new commercial business property is not a simple transaction. Lots of things can go wrong if you don’t take a look at it properly. Thus, here are some tips commercial property lawyer tips when purchasing a new commercial business location:
1. Retain Legal Counsel
Commercial property purchases are big purchases, wherein there can be no areas for mistakes. Because of this, you need all the help you can get, including the help from experts such as a commercial property lawyer. Retaining legal counsel can prevent you from making a myriad of mistakes. Discuss everything with your lawyer first before you take any steps in signing documents and purchasing a commercial property. There are many things in the fine print that only a lawyer can spot, which can prevent you from committing unnecessary mistakes.
2. Evaluate Purchase Requirements
When purchasing a commercial property, there is a certain set of requirements you need to meet depending on the properties surrounding it and the law in the area. For example, there are certain cities that require you to undertake environmental measures before you can purchase a commercial property, or turn a certain property into a commercial one.
You need to meet and abide by a set of environmental standards in order to put up your commercial business for some properties. Consulting a lawyer would help a lot in knowing which things you need to prepare for.
3. Initial Inspection
If you are not used to purchasing commercial properties, there might be some red flags that you might not notice. Hence, it can be very useful and practical if you can hire a conveyancing lawyer. A conveyancing lawyer won’t only act as your lawyer, but will also inspect the property for you. They will be able to prevent a lot of potential problems in the long run.
4. Consider the Investment Horizon and Risks
Of course, you’d expect to earn from every kind of investment. However, each type of investment has its own potential as well as risks. Therefore, it is important to know your investment horizon. This means you need to ask the right questions and assess the potential of the property and its location in the long run.
If you know that there will be big developments in the area, it will be profitable to invest in that property for the long-term. However, if the property is near hazardous places, it might be best not to risk investing in that area. Evaluating these things will help you reduce the risk you will carry with your purchase of this new commercial property. Another thing you must look out for is the maintenance and condition of the property. If the property will entail many repairs and maintenance expenses, then it might not be an ideal property to purchase.
5. Learn the Lingo
When you start looking at commercial properties, you will be faced with a lot of technical terms in real estate. To make sure you understand everything being told to you, you need to ensure that you are familiar with most of the terms used in real estate. Here are just some of them:
- Capitalization Rate – The capitalization rate is a measure used in real estate to get the valuation of the property to compare different investment properties. To compute for this, you need to get the ratio between the property income and the initial cost or market value.
- Vacancy Rate – The vacancy rate is the rate at which your rental property is occupied. To compute for this, you simply need to get the percentage of properties that are occupied versus your total number of vacancies.
- Usable vs. Rentable Square Feet – In order to assess the potential of your commercial property for profit, you need to know the usable square feet and the rentable square feet. The entire lot of your property won’t be generating profit for you. This is why you need to measure how much of your property can be put up for rent in order to generate revenue.
Purchasing a commercial property can be very challenging, but with the help of experts such as lawyers, you can do this very conveniently. These are just some tips that will help you in the purchase of a new commercial property. Top this off by doing your research as well and you will be able to arrive at the right decision.