Whether for your business or as an investment, buying commercial property may be one of the best decisions you’ll ever make. But it’s not something you want to jump into without thorough investigation and the right experts in your corner.
A commercial property purchase takes research, planning, and time. In other words, it can be complex. But what’s your next move if you’ve found a piece of property you want to buy? Here are some basic steps for a commercial property purchase so you have a roadmap of the process.
1. Line Up Financing
If you haven’t lined up financing yet, you might want to do this first. It’s helpful to know how much capital you have to work with before you start looking at commercial real estate. Then you can create a realistic budget and be in a better negotiating position when the perfect property appears.
2. Identify the Opportunity
Of course, you’ll need to find the ideal commercial property first. Even if you’ve looked around the area on your own, it’s possible that a knowledgeable realtor might know of a few more properties that meet your criteria.
3. Analyze the Financials
During this step, you’ll want to conduct a detailed financial analysis that includes current figures and projections about future performance. For example, if you are buying an office building, you’ll review items like occupancy rates, rental income streams, utilities, and taxes compared to any debt you plan to use to finance the purchase.
4. Submit the LOI
Next, you’ll submit a Letter of Intent (LOI) to purchase the real estate, which is the first formal action during the process. An LOI outlines major points of concern or interest to be addressed over a specified period. If everything is addressed satisfactorily, the next step would be a Purchase and Sale Agreement.
5. Complete Your Due Diligence
This critical stage in the process involves an investigation of the legal aspects of the property, such as zoning, boundary lines, accepted future uses, rights, and more. You should investigate whether there are any known title issues, liens, easements, encumbrances, or restrictions that might impact your ownership or development of the property.
6. Pre-Close
Interestingly, this is the point in the process where many potential buyers will pull out of the deal or get dropped by sellers. Reasons include the inability to execute or low bid prices on LOIs. If you are still in the running for the property, you can submit a final and best offer. The seller accepts the winning offer, and the contract gets negotiated, outlining the rights and responsibilities of both parties.
7. Close
At this final stage, an escrow agent will hold any deposit funds until closing. In commercial real estate transactions, it’s not uncommon for capital to come from a variety of sources. Once the closing date arrives, the customized paperwork gets signed and notarized. The property will then be considered yours.
Close the Deal on Your Next Commercial Property With Caldwell Commercial
The steps you need to take to successfully complete a commercial real estate deal shouldn’t keep you from owning or leasing property. But there’s no doubt that this particular industry has some complexities, which is why you should work with a trusted professional. Caldwell Commercial is an established leader in South Carolina real estate.
Our team of knowledgeable commercial real estate specialists and property managers has over 80 years of combined experience helping clients throughout the Charleston, SC, area. Contact us today to learn more about how we can help close the deal on your next commercial property.
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