Wednesday, 19 Jun 2019

How To Own A Commercial Property

You might have gone through your fair share of struggles when you were looking to buy your own home. You might have been fairly clueless about the whole process, but if you are now looking to purchase commercial property, a change of mentality and approach is the need of the hour.

Implementing a definite process will help you to choose a property that is suited to the needs of your business. For this, you need to have a clear idea about what type of property your business needs and one way to figure this out is by getting specific information about each commercial property you are interested in-

Ask yourself a lot of questions

You can simply start by listing down all the questions that come to your mind when you think of the word ‘property’. One question will lead you to another and gradually you will end up finding answers to numerous questions, such as:

  • What type of property are you looking for?
  • Are you planning to purchase or rent?
  • Would you like to share the property with someone?
  • Will your partner share the rent with anyone?
  • What are the risks involved?
  • How much are you willing to invest in the property?

These are some of the common questions that you need to find answers to when looking to buy a commercial property. Make it a point to give honest and realistic answers because you do not want to invest in property which doesn’t give you good returns in the future.

Visit Sites

There are brokers who might show you images of properties and ask you to make a decision. But, it is always wise to personally visit the site and get to know more about how it looks, its dimensions and whether it is suitable for your business’s way of functioning.

This will also help you to evaluate whether the price you are paying is worth the space, location and condition of the property.

By now, you might have figured out the importance of purchasing a commercial property in a convenient location. The main reason being your clients and employees can easily reach your office and do not have to rely on maps. Besides, years later if you plan to sell it off then you can expect great returns on a prime real estate property.

On the other hand, if your office is at a deserted location then there would be fewer buyers approaching your business, which means that you will have to compromise on its resale value.

Determine your finances

Just like you had to make compromises and adjustments while purchasing your home similarly, you will have to consider certain financial factors while purchasing a commercial property.

There are several financial institutions that will provide you a helping hand so that you can purchase a suitable property for your business. You can learn about commercial finance from renowned and experienced firms that offer funding for small businesses. They can understand your business’s needs and suggest to you an optimal financial solution to purchase property.

Remember, there is always a way to work out your finances and implement an effective solution.

Expert Advice

Entrepreneurs are engrossed with implementing effective business strategies, to earn high profits, which could hamper the amount of time they have on their hands to carry out property research. But, you can always get in touch with an expert who can provide you with valuable insights.

These insights help business owners to understand different perspectives (apart from their own) and then evaluate the most appropriate choice for their current needs.

If at all, you short-list a property that meets most of your preferences then you might always take an expert opinion. They can enlighten you on potential tax benefits, cash flow impact along with other possible effects on your organisation.

Get familiar with Real estate Vocabulary

As an entrepreneur, you might not be familiar to several terms and words which brokers refer to while helping you purchase a property. But, in order to avoid being completely clueless about their actions and intentions you can carry out some research on this.

If you do not have time to do research you can always ask an expert to explain the jargon to you so that you can pick the nuances and understand what a broker means when they say a particular sentence.

Some common terms used by them are-


Capitalisation Rate–  It refers to the income of the property when divided by the overall value of the property.

Cash on cash– It is the annual income over how much you have actually invested. There is a possibility that the amount invested could be equivalent to the amount of your down payment.

Debt Service Coverage Ratio– Operating income over your total debt service. It is basically the amount of debt you will be able to recover every year with the income

Eventually, it is a combination of efforts which will help you to purchase the right commercial property for your business.