Unless you’re a seasoned commercial real estate professional, you may still question whether a commercial property you have your eye on is a good deal. There’s always a degree of uncertainty when it comes to investing in real estate, but there are some questions you can ask to help you determine whether you should move forward with buying a property. According to a local Denver real estate expert, you should always seek answers to these questions before making up your mind:
Does a survey match the property lines described in the listing?
Before buying a property, you need to ensure you know exactly where the property line begins and ends. This is established through a survey, but many property owners fail to get a survey done so they may not even be aware of the exact boundaries of their property. Before making an offer on a property, ask the seller to the see the survey results if they are available. See the top 10 reasons to have your property surveyed
What is the property zoned for?
If you plan on using the property for commercial purposes, but it is currently zoned for residential use only, you need to know about this before you buy a property. It’s possible to request a rezoning with the city, but this can take time and can be a bit of a headache in some situations. If you don’t want to deal with the hassle of rezoning a property, make sure the property you are interested in is already zoned for your proposed use.
Are there tenants in the building?
Many commercial property owners will sell their property when there are tenants still inside. If this is the case, you will need to know so you can carefully review the terms of the lease. You should also personally meet the tenants if you are seriously considering buying the building to ensure you think they are trustworthy and won’t damage your investment property.
What are the annual expenses?
To determine whether you are going to profit off of the building, ask the current owner for information regarding the average annual expenses. How much does the current owner spend on maintenance and repairs? How much are property taxes? What about insurance? You will need an estimate of these expenses so you can calculate whether you will make money after the property is rented out to tenants. This can also help you determine how much you need to charge for rent in order to make a profit. Once you have this number, do some research to determine if the number you came up with is a fair asking price based on other rentals in the same area.
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