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Commercial Real Estate Acquisitions: 5 Tips for Success

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According to Forbes, it is now the best time in a generation to invest in commercial real estate property. In fact, professionals across multiple disciplinary fields agree that investment properties are a lucrative business venture.

However, success depends on a number of factors. Wealthy investors purchase the right property for the right price. They also ensure they have the best professionals on their team to protect their interest throughout the entire process. Not sure where to start? Here are five tips you should follow to help ensure your success.

 

1. Conduct Market Research

Despite the success stories your commercial real estate lawyer may share with you, not everyone has a great tale to tell. People who rush into the market to grab a good deal without doing their research may soon find out why the seller is so desperate to exit the market.

Always do your research on not just the local real estate market but your potential customers. This requires serious market research, which you may either do yourself or hire someone else to conduct on your behalf.

 

2. Prepare Your Finances

Bankers need to know that your finances are in order before they lend to you. There are a few factors they may consider when deciding your creditworthiness. You will need a good credit score, low monthly debt relative to payments, and proof this investment will generate a strong return.

The less the risk of a borrower you appear to be, the higher your chances of acceptance and the lower your interest rates may be. Remember to shop around to get the best possible deal.

 

3. Learn the Criteria for a Good Deal

What counts as a good deal will come down to many factors. The two most important ones are what you can afford to pay for the initial investment, including financing.

The second is the expected ROI. Investopedia also advises that the best deals are the ones you can get out of when you need to. Note that market rates will determine rent, utilities and other such expenses.

Try not to fall into the dangerous trap of believing you can raise it to match current expenses and future revenue goals whenever you like to. You could price your commercial space out of the market.

 

4. Create a Solid Plan of Action

Every business requires a business plan. Sometimes this is just a few pages outlining the general setup of the business and how it plans to go from Point A to Point B.

Other times, it is a 100-page document that goes into great detail and maps out a set course that the business may follow for the next five or more years. Whatever approach you choose, the most important thing is to have a plan and to be open to change.

If the market begins to show signs of slowing down, evaluate your plans and make the necessary adjustments.

 

5. Hire the Right Professionals

Throughout your commercial real estate journey, you will need three main professionals on your team: an accountant, real estate closings lawyer, and a developer or builder.

All three of these come together to give you valuable advice and take your plans from speculation to actualization. Be selective when choosing these professionals, especially your attorney.

This is the team you will rely on to not just help your business thrive, but keep you out of legal and financial troubles. In particular, the development of the right purchase contract that will allow you to properly conduct legal and financial due diligence prior to being committed to the purchase is fundamental.

Also, the legal due diligence process can make or break the investment, so it needs to be handled so that no stone is left unturned.

Are you still searching for a commercial real estate or business purchase lawyer to complete your Miami investment team? We specialize in all areas of business, real estate, and the crossroads in between. To schedule an initial consultation, give us a call at 800-483-7197.

Image Credit: Getty Images / djiledesign   

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