Why You Should Never Buy Commercial Property Without Expert Guidance

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Today, it’s become fashionable for online property gurus to recommend that people buy commercial properties. After all, “buy to let” is dead. 

But, of course, hardly anyone has experience in this area. And even those that do often make bad deals that leave them out of pocket.

Therefore, you should only buy commercial property with expert guidance. 

But why? Here are some of the specific reasons: 

Helps Avoid Negotiation Pitfalls

First, having someone there able to help you through negotiations is essential to ensure that you get the best deals. It’s not always clear how much commercial property is worth, especially considering that many buildings and properties are unique in their area. 

Therefore, a broker who understands the market can help you. You want someone there who can stand by your side, offer guidance, and ensure that you get the best possible deal for you, not the current property owner. 

Hidden Legal Complexities

Most residential properties have a quit claim deed for transferring the title. But with commercial buildings, it can be more complicated than that. There are often things that you need to do or limitations on development or zoning rights that can make life difficult for you.

These hidden complexities aren’t clear from the outset until you start wading through the weeds. Eventually, you get to the point where you are about to go through with the purchase, only to discover something new you hadn’t factored into your calculations. 

Ideally, you want to avoid these situations where possible, so working with a lawyer or skilled broker is critical. Someone should be checking the paperwork and regulations to ensure you can bring your vision for the property to life. 

Due Diligence Issues

Related to this, there may also be due diligence issues associated with the property (that don’t apply to conventional homes). For example, you may need to check for structural issues and ensure there are no hidden liabilities, like mortgages or loans attached to the facility that you’d inherit if you bought it. 

Tenant Considerations

Then there are tenant considerations. The property may already have a business inside on a lease, so you might not be able to change your arrangements straight away due to contractual limitations. There may also be issues in removing the company even if their lease comes to an end, limiting how you can use the building. 

For example, you might have your eye on some retail units. However, you may not be able to convert them into residences in the way you want because there are already companies using them, and some of them have up to five years left on their leases before you can force them to vacate. 

Marketing Misjudgment

Finally, you may misjudge the marketing of the property and overpay for it. For example, you could lose out in a declining market, which might reduce your eventual investment returns, especially if the specific commercial sector you want to buy is on the way out (such as office blocks on the outskirts of major cities).