Home > Investment Guide > Real Estate Investing

How to Invest in Commercial Real Estate for Your Business

While most fledgling businesses start out paying a lease on a small commercial property, over time your business can grow, necessitating a larger space. Or you may discover that you’re in the wrong location and a move could produce an uptick in business. These are things you learn along the way and by signing a lease, you have some freedom to make changes when your terms expire. But once you’ve become an established business entity and you’ve got some money in the bank, you might want to think about setting down roots and purchasing a commercial property for your company. This permanence not only allows you to make your mark on the community, linking your brand to a physical location, but it can also increase your assets, potentially contributing to growth, longevity, and stability. However, you need to go about purchasing commercial real estate in the right way. So here are just a few tips to help you invest in the right property for your business.

There are certain things you need to consider when it comes to purchasing commercial real estate, and the top three are location, location, and location. Okay, that’s just one thing, but it’s really important, especially for retail stores. The reason is that the location you choose could make or break your business. Not only do you need to be near the demographics that your business caters to, but you also need to provide easy access to both vehicle and foot traffic. Being in an area where all of these criteria are met is the best way to ensure that your business flourishes. While you can certainly do a lot in the online arena these days to move your company forward, getting customers into your store is still one of the best ways to make sales and promote your brand.

Of course, location isn’t the only factor to consider. Cost is another major point of contention for most interested buyers. The current property owners want at least fair market value for their property, and often more. But it’s your job to negotiate for a price that you can actually afford, one that is based on a carefully-calculated budget. A commercial property may seem perfect, but if the mortgage payments are beyond your means, it’s hardly the right place for your business to succeed. So you’d better be willing to drive a hard bargain, and ultimately, walk away if you can’t agree on a price that your business can bear.

You also need to consider the space itself. Just because the location is great and the price is right doesn’t mean the square footage can accommodate your business. While it’s always possible that you could expand somehow, you’ll want to check with the zoning board to make sure that’s allowed before you get started. And you need to factor in the cost of renovations when you make your initial budget. But what if you end up with extra space? It’s nice to know that your business has room to grow, but in the meantime, unused space could be nothing more than a drain on your resources. The obvious solution, if the property is otherwise perfect, is to take on tenants that can help to pay your mortgage until such time as you need the space. Whether you’re renting out conference rooms in New York or leasing retail space in Seattle, having some extra room to play with could make an otherwise oversized commercial property a lot more profitable.

comments powered by Disqus