How to Buy Commercial Property

Owning commercial property can be a great investment if you are clear about how to buy. This is a great time in the market when you can borrow money on very aggressive terms. With interest rates at near historic lows a sizable number of entrepreneurs prefer renting over buying. If you have the opportunity to either rent or buy, buying is often times your best bet. There are a few things you need to know. If you hire the right real estate agent to assist you, the investment could be a great one in your future. Use these steps to learn how to buy commercial property.


Owning does offer many benefits. Each time you make a mortgage payment, you'll build more equity in the commercial property instead of giving your wealth to a landlord. As the commercial property value appreciates, the equity rises. You control the space as the landlord by deciding everything from what color to paint the building to who you want to lease unused space to. Since you can decide on financing and maintenance and upgrade schedules, you also control costs. In addition, you never have to stress over negative cash flow such as increased rent.

The first step is to write down what it is that you are expecting to buy. Think about the size of the building and if you want one that already is occupied with renters and if you want more office space or you want your focus on customer-oriented businesses, such as food vendors or bookstores. It is important to consider all of the many important aspects of the decision you need to make with yourself before discussing it with a real estate agent.The second thing you will want to do is talk with a mortgage lender. If you are in need of a loan for your purchase, find a trust worthy mortgage lender that handles loans. It is wise to have pre-approval with the mortgage lender before getting a real estate agent. Doing so already allows you to know the a price range you can consider and help you identify the properties you qualify for.The next thing you will want to do is find a real estate agent. Write down any questions you might have. Tell your real estate agent what you are looking for in particular Be available for questions and the possibility of viewing of potential properties. Also, take the time to talk with them and understand the differences in the process of buying commercial property as opposed to residential property. If you buy property with tenants, this will be an easy process. If you have other obligations, hiring a property management firm may be the way to go to get tenants in place and enforce the tenant regulations you put in place.

Buying a commercial property generally requires a cash down payment of 20 percent of the value. If your property is occupied by other tenants, you will have to get signed leases to show your lender. You'll also have to arrange for the property to be insured against damage or loss.

You will want reserve funds or credit for unexpected repairs such as air conditioning systems, roofs, foundations, etc.

Owners are typically able to deduct a portion of the value of the building and improvements each year as depreciation, which can reduce taxes on business profits. If you purchase the property in your own name, the business can pay rent to the owner. This is great because it will generate income to you without incurring double taxation.

Keep your business future in mind. How much space are you going to need 10 years from now? Having tenants will give you more flexibility, as you may be able to take over their areas as needed. mortgage lender that handles loans. It is wise to have pre-approval with the mortgage lender before getting a real estate agent. Doing so already allows you to know the a price range you can consider and help you identify the properties you qualify for.The next thing you will want to do is find a real estate agent. Write down any questions you might have. Tell your real estate agent what you are looking for in particular Be available for questions and the possibility of viewing of potential properties. Also, take the time to talk with them and understand the differences in the process of buying commercial property as opposed to residential property. If you buy property with tenants, this will be an easy process. If you have other obligations, hiring a property managment firm may be the way to go to get tenants in place and enforce the tenant regulations you put in place.

Buying a commercial property generally requires a cash down payment of 20 percent of the value. If your property is occupied by other tenants, you will have to get signed leases to show your lender. You'll also have to arrange for the property to be insured against damage or loss.

You will want reserve funds or credit for unexpected repairs such as air conditioning systems, roofs, foundations, etc.

Owners are typically able to deduct a portion of the value of the building and improvements each year as depreciation, which can reduce taxes on business profits. If you purchase the property in your own name, the business can pay rent to the owner. This is great because it will generate income to you without incurring double taxation.

Keep your business future in mind. How much space are you going to need 10 years from now? Having tenants will give you more flexibility, as you may be able to take over their areas as needed. .

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