Investing in commercial property can have a huge payoff, but it is crucial to understand how it differs from residential property. This helpful guide to buying commercial real estate in Florida from the experts at Handin Law shows the risks and rewards of investing.
The Basics To Buying Commercial Real Estate
The most crucial aspect of buying commercial real estate is to decide what sort of property you want to buy, as distinct options will come with specific challenges and rewards. Other things to consider before making a significant commercial investment include:
Assess Your Options
As commercial properties are used for business, it is vital to understand your options. For example, someone who does not like to interact with many people would probably not invest in an apartment complex. Other examples of commercial real estate include:
- Industrial Buildings
- Mixed-Use Buildings
- Office Buildings
- Retail Buildings
Understand Your Commitment
As with any investment, buying commercial real estate takes a certain level of commitment. Whether you are purchasing a property to rent out to individuals to use as a home or retail space or buying an office for your use, your reasoning should reflect your wants and needs. It is also vital to ask yourself what your long-term goals are for the property. Is this a decision that will help you build equity over time, or are you using it for your own use, for supplemental income or for its tax benefits?
Know Your Financing Options
Once you decide to purchase a commercial property, the first step you should take, even before finding the perfect building, is to make sure you will be able to secure financing. Knowing your credit score is a proactive way to know the types of loans you should apply for. Ensuring your personal and business reports are accurate will save you valuable time from not having to dispute errors. Always compare your options to secure the best fees, interest rates, and repayment terms.
Classes And Types Of Commercial Real Estate
As important as it is to consider the type of commercial property you want to purchase, it is also vital to understand the different commercial property classes. Talking to a real estate lawyer can help you better understand this aspect. They include:
Office And Apartment Classes
- Class A: The highest class of properties usually pose less risk to buyers as they are newer and up to date. Due to their quality, Class A properties often bring in more revenue and need less upkeep. These commercial real estate assets are also attractive as they have a faster resell rate.
- Class B: Very common and the most middle ground of all office and apartment classes, Class B properties often have lower rents than Class A and may require some general maintenance. Due to these properties being a higher risk, sellers often offer them at a lower price.
- Class C: Due to the age and level of renovation these properties may require, Class C properties pose the most risk to those looking to buy commercial real estate. Those factors also mean that the purchase price is often much lower than either Class A or Class B properties, but also bring in the lowest profit margin.
Other Types Of Properties
Depending on the type of property you are looking at, retail spaces and industrial buildings will have different designations. Make sure you discuss the classification and condition of your intended purchase thoroughly before purchase. These precautions ensure you have a full understanding of your risk.
Hiring A Real Estate Lawyer For Buying Commercial Properties
Buying a commercial real estate opportunity can be complicated, but it doesn’t have to be when you hire the experienced lawyers at the law offices of Gary I. Handin, P.A. Not only can we manage the complex paperwork that comes with purchasing a property, but we also help you negotiate the fairest price. If you are considering buying a commercial real estate property, call us today at 1-877-815-4560.