How to Buy Commercial Real Estate

Investing in commercial real estate has become one of the biggest opportunities to earn a lot of money in the long run. Usually people invest in commercial real estate either to house their business, rent it out to other businesses or to sell it at a later date when the price appreciates. If you are thinking of buying a commercial real estate property to house your business, which is currently run on a rented property, you may wonder how you could buy a commercial real estate property? What are the things you have to consider? Whether you want to house your business, or you want to buy it for real estate investments, the following paragraphs would give you an idea of how to go about buying commercial properties.

Purchase Commercial Real Estate

The first and foremost step of buying commercial real estate properties is to decide why you want to buy it. You may either want it to house your business or you may just want it for investment purposes. Whatever the reason, you need to get a real estate appraisal done to access if you would get enough profits in return. So in case you want to rent it out to a company, then you need to check the kind of rent companies and other businesses pay in that locality. On the other hand if you want to house your business, then you need to see how much profit you are likely to gain after paying off the monthly mortgage. If the profits are not good enough, then it may be better to run your business in a rented property.

While dealing with any kind of real estate property, it's better if you can get in touch with a real estate attorney, so that you can be familiar with the rules and regulations of dealing in such properties. You need to understand the legal terminology so that you can sign a deal which can benefit you. Once you have decided to take the help of a legal professional, the next step is applying for real estate financing. Getting a commercial real estate loan is not that easy, as the chances of default are high (that's what banks feel). If you miss a payment there are chances of high penalties, so take this factor into consideration. Moreover, you need to stay away from properties which have a liens attached to it. Keep all the documents ready, including your repayment plan, the number of loans you have already taken and the real estate investing business plan, so that you can be approved for the loan quickly.

How to Buy Commercial Real Estate in Canada

Whether you live in Canada, USA or any other country, the basic 'rules of the game' are the same. You need to see whether it's a profitable venture. Commercial real estate investing can be a good option if you are able to gain enough profits, as it can help in the reduction of amount you pay in taxes. Every year you can write off a part of the cost of the building while filing your taxes. If you rent out the property there are tax advantage which you can avail of.

An important step is check the market rate of properties, besides the kind of interest rate charged by banks. Moreover, you may also think of buying the current property, as moving out would mean additional costs, besides making people aware of where you have moved.

If you want to buy the property for housing your business, then you need to consider the kind of growth you are expecting before buying. That's because if your growth rate is very fast, then you may need a larger place at a later date, which may cause problems.

Buying Commercial Real Estate sans Money Down

Usually most banks require a down payment of 20 to 30% of the total value of the property. If you are thinking of buying real estate with no money down, the chances of getting such a loan are less, and that's due to the risk that banks take. That does not mean that no one offers a commercial real estate loan without down payments, but you may need to shell out more money in the form of interest. You can also ask the seller to finance the down payment with the help of a second mortgage. The bank would provide you with the remaining amount, which is usually between 70 to 80%.

So, these were some of the important steps you must be a sapient about when buying commercial real estate properties. It's always better to consult with a real estate agent and a real estate attorney, so that you crack the best deal.