You’ve probably heard the old maxim that there the are three important factors in buying real estate: location, location, location. While the area and situation of a property is extremely important, it is far from the only concern a potential buyer should have—especially if a profitable spot can be found in an area where property values are significantly lower.
What to Consider Before Buying Commercial Real Estate in Florida
As you search for a commercial property to invest in, consider the following elements:
- Appraisal. If you are buying an existing structure, you should have the property fully inspected before discussing price. You will need to know how much money you could potentially devote to fixing the property in order to negotiate a deduction on the purchase price. You may also need an environmental inspection to find out the building’s impact on the area.
- Rent potential. Commercial properties can be purchased many different ways for a variety of uses. You may acquire a building that already houses several tenants, taking over the contracts and rent. You may opt to buy land in a developing area so that you can build commercial buildings or multi-family housing. If you are planning to have tenants, you should calculate the potential of your property using a rent multiplier (an estimate of how much you could earn monthly through rent on your property).
- Neighborhood. Consider who lives in the area of your property. Is there a market for the business you are hoping to create? Are there any competing businesses nearby? Will you be able to reach your suppliers easily to cut down on transportation and restocking costs? Is the crime rate low? Do the businesses around you complement your goods and services, rather than take away from them?
- Future growth. If your investment takes off, will you have room to expand? Are there unused areas nearby that could act as an annex or warehouse as part of the deal?
- Zoning laws. Your options will vary depending on what you want to do with the property. For instance, you cannot open a bar too near a school zone or put an amusement park in a residential area. Make sure the area is properly zoned for special uses of your structure or any renovations you intend to make.
Many people who are considering real estate investments are unprepared for the flood of paperwork that their new business entails. The documentation to obtain and finance commercial property varies greatly from buying a house, leaving many investors confused—and in a position to lose a considerable amount of money as a result. For this reason, it is vital that you discuss your purchase with a Fort Myers real estate attorney before committing to buy. You could save thousands of dollars in unforeseen costs by speaking with an attorney up front, so be in touch with me!