Every successful commercial property investment requires an understanding of real estate terminologies, trends, renting arrangements and a good grasp of the potential risks. Also, buying an ideal commercial space demands a keen eye towards certain factors including dependability of location or neighborhood, local job market and current as well as future infrastructure projects in that particular area.
Let's have a brief understanding of each factor. This article combines a step-by-step guide for the first-time commercial real estate buyers to avoid any hassles during the investment procedure.
Step 1: A thorough evaluation of your real estate investment
Any first-time commercial real estate buyer should be clear on two crucial points.
1. What kind of commercial real estate do you want to invest in?
Any property which is used for business purposes is a commercial property. However, every buyer needs to know where to put their foot. There are ample options available to invest in, such as:
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Retail: shopping centers, malls, grocery stores, gyms
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Rental: office spaces, co-working spaces
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Hospitality: hotels, hostels or holiday homes.
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Office: work spaces for businesses.
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Industrial: factories and warehouses.
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Land: Multi-use
2. What is your investment strategy?
While some real estate investors will purchase and resell the property after a short period for a profit within a small time frame. While other commercial real estate investors will look for a longer commitment, so define your strategy before proceeding further.
Step 2: Start looking for the three most important people for your investment
These people will help you find, purchase and maintain your property.
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An experienced real estate broker
In order to locate and acquire prime commercial real estate.
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A professional attorney
In order to deal with contracts, property law, and state and local laws regarding real estate transactions.
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A Certified public accountant
In order to document all the commercial real estate transactions.
Step 3: Locate the right property
A lucrative location is a first and foremost necessary thing for any business to flourish and sustain. It should be easily accessible to your customers and should have functional connectivity via the different modes of transport.
In Pune, some of the best known commercial areas are Baner, Shivaji Nagar, Pimpri, Camp, Deccan, etc.
Salunkhe Vihar and Katraj-Kondhwa road are also catching up as commercial hot-beds of the city.
Step 4: Fund Arrangement
Find a lender, bank or NBFCs
The lender will help you get financing in place to purchase the property. Don't forget to calculate the interest rates along with future returns. Ultimately, ROI plays a very important role in the final decision making.
Step 5: Due Diligence
ave the property inspected
Keep the following things in consideration
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Determine available uses of the property
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Investigate why the owner is selling the property (if it is a pre-owned one)
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Determine if there are any major repairs necessary
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Examine potential expansion
Don't forget about insurance
This is actually a no-brainer and it is critical that you buy insurance for your new property. Insurance against theft, fire, natural calamities (flood, earthquake, lightning strike) is some of the most important types of coverages you should consider.
Prepare a detailed income and expense analysis
Ask your three most important people to create a detailed analysis of the potential income and expenses with all disclosures and legal papers in hand. It is important that you conduct this analysis by yourself also before purchasing the property in order to verify that it is still a sound investment.
Now, without spending any more time, it's time to make the purchase. Good luck!
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