Bermont Realty (1983) Ltd.

The 5 Essential Tips for Buying Commercial Real Estate in Edmonton and Area

Buying commercial real estate is one of the most excellent investments. It’s one of the most lucrative investment opportunities of all time.

However, when buying commercial real estate, it’s crucial to understand that the higher the reward, the higher the responsibility. Thus, it’s advisable to mind due diligence and ensure you take the proper steps during the purchasing process.

If you are looking into purchasing commercial properties as an investment, it’s essential to know that it’s quite different from buying a residential property. The commercial property will require more out of you. However, with the proper dedication, you can always learn how to navigate the complexities of the investment.

Below are five essential tips you should consider when purchasing a commercial property.

1. Establish Your Reason for Investing in Commercial Real Estate

Ask yourself why you want to invest in real estate. While buying commercial real estate is similar to purchasing traditional properties, it’s on a much larger scale than residential real estate. As an investor, you must know why you want to invest in commercial property.

What are you looking to accomplish? Do you want to add more properties to your portfolio? Are you looking to increase your assets?  

Purchasing a real estate property without proper planning can lead to immeasurable loss. Planning starts from establishing your bottom line and what you hope to accomplish.

Instead of buying the property first then later figuring what to do with it, experts recommend that you plan every detail. This will help you maximise on the property and find the right real estate to help you achieve your goals.

2. Look at Your Current Investment Options

Commercial real estate is a broad term that has over four different categories. These categories include industrial, office, hospitality, multifamily and retail properties. The commercial properties are further categorised into classes A, B, and C.

Class A offices are often high-end offices with recent updates, high-quality finishing and are usually priced competitively. Class B offices are renovated after buying and are less competitive when it comes to pricing. On the other hand, Class C offices are older buildings often over 20 years old and may need urgent maintenance and sometimes minor repairs.

Industrial properties constitute plants, factories and warehouses that are used for manufacturing and distributing products. Retailers use retail spaces to sell products and offer clients their services. Examples of retail properties are shopping malls and retail stores.

Hospitality properties include motels, hotels and other buildings used for short-term holiday renting. The last category of commercial properties is multifamily buildings. These are residential buildings that include over five residential units, such as complexes and apartments.

Ensure you know the options available for investment. Once you determine your goals, it will be easier to choose the right commercial property for investing in.

3. Surround Yourself With Right-Minded Individuals

Real estate is a social and people industry. Purchasing commercial real estate property is no exception. Ensure you align yourself with the right individuals and professionals to get the best services.

Ensure you hire a real estate agent that focuses on the type of property you’re looking to purchase. You should also consult a real estate lawyer who is well-versed in commercial real estate laws. You can even consider hiring the services of a certified personal accountant (CPA) to ensure all your financial transactions fall into place.

Knowing who to align yourself with in the real estate industry will help make your work easier and get the deal to go smoothly. Different professionals can help. Don’t be scared to ask for help when you need it.

4. Secure Financing

Before looking for the right realty listings to buy, it’s essential to have different financing options. The first step to securing your finances is looking at your credit to determine your borrowing power. Depending on the type of loan you are looking for, and the lenders you approach, your credit reports and business credit scores may play an essential role in determining how much you can borrow.

Most lenders consider your personal credit score as well. Review all your credit reports to ensure that the information is up-to-date and accurate. If you find any errors in your credit report, consult the credit bureau and your lenders to dispute the errors.

Depending on the type of property and your credit score, you can choose from the following:

  • Business loans
  • Hard money loans
  • Bank loans
  • Apartment loans
  • Seller financing

Ensure you consider all lenders’ interest rates, repayment terms, and other loan fees and settle for the best option. Securing financing before looking for a property will help you know which property you can afford.

5. Mind Due Diligence

Purchasing commercial real estate property is not similar to buying a residential property. Before proceeding, remember to do some research and due diligence on the property. Analyse the whole property and run your numbers before making any final decisions.

Are the risks worth the final results? Is there another property that better suits your goals and financial capabilities? You may find a better property out there that is better suited for your bottom line.

Analyse every detail of the transaction and only proceed once you are 100% sure about the property and its inherent benefits to your portfolio as an investor.

Find the Right Property When Buying Commercial Real Estate

Are you interested in buying commercial real estate? Purchasing a commercial property is a wise investment for individuals who know what to expect. Most investors are drawn to real estate due to the ROI potential.

However, you must be smart when investing in commercial real estate. You may be too overwhelmed with numerous opportunities to earn, such as commercial property leasing and office space renting. However, once you narrow down your choices, contact us today at Bermont Realty Ltd to help you find the right property for you.

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