If you’ve been dreaming of the perfect office building, warehouse or strip mall, coming across a “land for sale” sign may feel like the last push you need to making your dreams a reality.
But despite the big shiny sign with its tempting offer of making you a commercial real estate owner, there’s a lot more to building your own commercial facility than just signing a few papers and being done with it.
Before you pull the trigger, make sure you’re prepared by doing these things:
- Consider the Long -Term Potential. Areas fall into and out of favor for commercial real estate, just like neighborhoods have ever-changing levels of popularity. Before you get too married to the idea of being a commercial real estate owner, make sure you’ve considered areas that are likely to suit your company in the long-term. After all, spending far too much to be in a trendy spot can be a bad move if your business can thrive happily somewhere that’s been steadily popular for decades.
- Check with Planning and Zoning. Planning and zoning might feel like an oppressive regime designed to crush your business dreams, but there is a reason this department exists. City planning is necessary in order to keep traffic flowing, protect natural resources and ensure that your city is still a nice place to call home. Before you get too attached to a parcel of land, always check with P&Z to ensure that what you want to build is compatible with the site where you want to build it.
- Call a Real Estate Pro. Sure, the agent on the sign can help you with the paperwork, but he or she might not have your best interests in mind. Instead of making a quick call to the agent who works for the seller, make your own contact with a commercial real estate agent in the area. Interview several real estate professionals so you can choose the one with whom you’ll have the best working relationship. Armed with your own expert, you may be able to negotiate a much better deal on the property in question.
- Touch Base with Your Bank. Many business owners are also homeowners, so they’re shocked when they discover that the five or 10 percent down payment they had to produce for their house won’t touch a piece of commercial real estate. Depending on the situation, you may need upwards of 30 percent or more, but only your banker can tell you for sure. Commercial real estate loans are governed by an entirely different set of rules.
It’s a beautiful piece of land, to be sure, and if you’ve done your legwork you know it’ll serve your business needs for decades to come. But before you pull the trigger, always make sure that you’re both willing and able to do what your zoning commission requires to build the facility of your dreams there, that you can get financing and that you have a knowledgeable real estate professional on your team to help you get the best price and terms possible.