Buying Commercial Property

Buying commercial property is generally a way of bringing in a little extra income. By definition, commercial real estate is any real estate used for commercial gain, but in a broader sense it is any property that is not a single-family home that you purchase. You know what it is, but how do you actually go about buying commercial property?

Search Commercial Property For Free

Your First Move Buying Commercial Property

First of all, if you are going to make a commercial property purchase, you are well served to hire a lawyer. A lawyer can go over contracts, agreements, and property values with you so that you do not end up paying too much for or agreeing to unfair terms on a property.

Secondly, you should figure out what type of property you want to buy. Do you want to buy land you can develop yourself? Do you want to buy a property with a business already on it? Or do you want to buy housing real estate like apartments from which you can earn rent? Until you know what you want to pursue, it is difficult to make a purchase.

Once you know what you want and have your lawyer, check the Commercial Dex listings. There, you may get an idea of what is available and what is within your price range.

Figuring Out the Commercial Buy Itself

When shopping, you want to investigate properties fully. One item you should consider is the capitalization rate of a property, or Cap Rate as it is often called. The cap rate is a percentage that shows the annual return on a property before mortgage payments and taxes on the investment.

Add Commercial Property To Commercial Dex

Once you find something you are interested in that is in your price range, you may be asked to sign a letter of intent (LOI) regarding the property. This should be looked over by your lawyer to make sure it is not binding in case something goes wrong in the contract. The LOI is a document stating your intent with the property, but that precedes the contract and its signing.

Commercial Leases

When dealing with leases on your commercial property, you should consider two basic types: ground leases and net leases.

Ground leases: Ground leases are leases for use of the total land. In most cases, such leases provide for improvements to be made by the user to the land. For commercial real estate properties with businesses like gas stations or rental homes, this is often a good way to go so that the user can make improvements that may help them as well as you.

Net leases: Net leases are leases that require the user to pay not only rent, but also property taxes and other such expenses. These are good for commercial properties in which you have a lot of ownership expenses. Such leases are great investments usually, because you will have little overhead with your investment.

Get the right property, get a lawyer, and set up the right type of lease and you will be ready to have your own commercial property. Buying isn’t hard; you just have to have all of your ducks in a row.