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Industrial Property

Buying Industrial Property

A How-to Guide

Finding the right industrial or commercial property will require both time and research. What kind of business are you doing and how will the property be used? Have you determined your specific requirements for the property? The answers to these questions will determine the number of options to choose among and your ability to find the perfect industrial property.

Are you just getting started with the process? Wondering what factors are the most important ones? Keep in reading to find out.

When to Buy and When to Lease?

Before moving on to the next step, you’ll need to decide when it would make more sense to lease commercial property over buying it.

The location is the first and the most important factor. A neighbourhood that is considered particularly hot for doing business or setting up an industrial facility today could lose a lot of its charm in the near future. When it comes to locations, there are certain trends and these trends can eventually backfire in the future.

Thinking about the practical appeal of the location rather than following trends blindly will make it much easier to choose a good place that will maintain the long-term appeal of the industrial property.

The condition of your business will also help you determine whether the time is right to buy or if you should stick to leasing industrial real estate.

Assess your current financial documents and come up with a business plan for the future. Are you about to experience corporate expansion? Do you see your financials as stable? In such instances, you should definitely think about purchasing your own property. In case your company is not doing so well, you may want to slow down and postpone the purchase of industrial real estate for later on.

Do your homework in advance and understand all of the risks and benefits that property ownership brings. Cash flow could be strained seriously, which is why you shouldn't make an impulsive decision.

The Benefits of Industrial Property Ownership

Buying industrial real estate for your company will deliver a vast range of advantages that will be unavailable in the case of just leasing.

For a start, its always a better idea to pay a mortgage rather than a lease. After your done paying the mortgage, the building or commercial property is going to be yours. Paying the lease will give you nothing and this type of spending doesn’t make financial sense in the long run.

Commercial property ownership will also affect the image and the reputation of your brand. Companies that have their own facilities are usually perceived as serious and reputable. You have tons of freedom in terms of using industrial property in the best possible manner. Such freedom will be non-existent in the case of leasing.

Even if you experience business problems in the future, commercial property is an asset. Depending on the location and the real estate market trends, chances are that its value is going to increase in the years to come. You can use this opportunity to make some money.

Finally, if you stick to leasing, you’ll have to deal with changing market conditions. Depending on the location of the property and the trends, chances are that your lease will increase in the future. This kind of volatility can stand in the way of business planning and force you to spend more money on the ideal industrial space.

Tips for Buying Industrial Real Estate

You’ve done the analysis and you understand the risks and the advantages stemming from commercial property ownership. It’s now time to start looking at the market options and figuring out which one is going to be the best one.

When thinking about such a major investment, its imperative to examine all of the market options and do a careful side by side comparison. Do your best to keep emotions under control. Falling in love with a particular property right from the start is far from the most rational thing to do.

For a start, assemble a team of experts. You can benefit from their know-how and professional skills to sort through the options and to buy the right industrial property at the best possible price. Some of the experts you’ll need during the property purchase include an accountant, an experienced commercial real estate agent, a mortgage broker and a lawyer. Needless to say, all of these professionals should have some experience in the field of buying and selling industrial real estate.

Next, you should start looking for the ideal commercial property.

The first and the most important characteristic is location. Industrial property has to be located conveniently to simplify your operations and bring down the cost of production and transportation. The right location will depend on your business goal, the industry that your active in and the clients that you interact with on a regular basis.

Next, assess the physical condition of the building itself. Two of the professionals that you may want to work with include a real estate valuator and an inspector. These experts will help you determine whether the asking price is realistic and if you’ll have to spend a lot on renovations after acquiring the property.

Understand the fact that industrial real estate is valued differently from residential properties. The calculation is usually based on the usable square footage. This is why you should look for a property valuation expert that has experience in commercial real estate.

Pay attention to the allowable uses of the industrial property, the ease of access, the size of the parking lot and the manner in which the place could be secured. Depending on your production processes, security could be of uttermost importance.

Finally, make sure that the seller is serious and motivated. Just like in any other field, this characteristic will be tremendously important for the success of the negotiation. A seller that ís committed to finalising the process quickly and efficiently will be much more flexible and easier to communicate with.

A Few Additional Tips

There are several additional steps you need to complete before finalising the deal and buying industrial property. Take one final look at your motivation and the long-term needs of your company. These will be vitally important for making the most of industrial real estate, buying the right place and using it in a way thats going to enhance your corporate expansion.

Make sure that you have secured the necessary funds before finalising the deal. Look for mortgages, do research and understand the terms and conditions. You cant get started with this process after you’ve found the property that your eager to buy.

Work with your attorney and your accountant on the creation of a detailed, all-encompassing contract. Structure the terms and conditions to your full advantage and make sure that provisions for all kinds of situations are included. Anything from zoning rights to tax requirements should be identified and described in detail.

Now that you have made the acquisition, its also time to update your business plan.

The addition of an industrial property to your portfolio will change things for your company. There are numerous expenditures associated to maintaining the property operational and in good condition. Factor these types of expenditure to make sure they aren’t going to create an excessive burden for your business.

Do not underestimate the importance of the preliminary steps and find the most experienced professionals to guide you through the process. Industrial real estate has its specifics and you’ll find it very difficult to complete the purchase on your own. Specialised assistance and enough research will help you determine what your business needs, identify the best market offer and close the deal quickly.

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