Whether you’re starting a new business or you’re a seasoned veteran when it comes to owning a company, the thought of purchasing a new commercial property can be quite daunting. Getting ready to sign a lease or purchase a new commercial building isn’t just about having the financial assets for the down payment or the rent — it is much more complex than this. As experienced commercial Realtors in the South Shore area, we’ve seen our fare share of poor investment mistakes and unjustified property purchases, and we’re here to make sure you don’t meet the same fate. Below are some of the most common pitfalls people encounter when buying commercial Real estate in Brockton and surrounding areas.
5 Mistakes to Avoid When Purchasing Commercial Real Estate
- Not Understanding The Market. If you don’t know the demographics of the Brockton area (or other city in the South Shore), then you may find that your business will suffer if the market has no demand for the product or service you offer. It’s important to analyze the data while you’re still shopping around for a location. Don’t forget to take into account the job growth, the population growth, unemployment rate, property taxes and other metrics. We also recommend contacting a local commercial Realtor as they will have more insight regarding how the town has grown and changed throughout the past 10+ years.
- Poor Negotiating Tactics. Contrary to popular belief, it isn’t all about negotiating the best price for the commercial property. Don’t forget to ask the seller why they are selling the building. Their answer could vary from their business is going under to they outgrew their current square footage or they simply don’t like the location. Whatever the answer may be, don’t forget to do some background checks on the building such as a commercial building inspection. Inspections that find issues with the building can help you leverage a better deal in the long run.
- Not Knowing The Asset Type. This is a huge mistake for first-time buyers who are interested in purchasing commercial Real estate. Retail, industrial, and office spaces should all be treated differently when it comes to profit, expenses, and other financing details. At Quinn & Associates, we can help you understand the difference between each type of property, including benefits and setbacks of each type when it comes to your type of business. It’s also important to find a commercial Real estate company in Brockton that offers a variety of properties so that you have plenty of options to choose from.
- Too Much Investment In Repairs. This is often a mistake that occurs after a commercial property is purchased, but should still be mentioned here so that others don’t fall for this slip-up. If you’ve recently purchased a commercial or industrial building with hopes to make some repairs yourself, make sure that you are investing in the right repairs. For instance, replacing the old (yet still structurally sound) roof instead of investing in repairing a crumbling foundation will not improve your return on investment. If you have the money to purchase a building in better shape, then go with this option instead of investing in multiple repairs.
- Not Understanding Operating Expenses. Industrial buildings, commercial buildings, retail buildings — no matter what type of building you’re about to purchase, don’t forget that you need to calculate the monthly and yearly operating expenses. Many first-time business owners don’t account for things such as utility costs, maintenance costs, and the like. We highly recommend asking the current/previous owner what their average operating costs were if they are in a similar or related industry, as this can give you a rough idea of what yours will be moving forward.
This list is by no means complete, but it will help to get you thinking outside the box before purchasing your next commercial property. Don’t forget to reach out to professional Realtors as they can be very helpful when it comes to answering questions about the property as well as the surrounding area. Interested in purchasing or leasing commercial Real estate in Brockton or elsewhere in the South Shore? Check out our selection and contact us online.