Acquiring a property for your business can be a significant milestone. However, whether you are a first-time investor or a seasoned one, getting lost in the excitement can be quite easy. And the long-term consequences can be devastating for your business.
If you are investing in commercial real estate, it is in your best interest that you steer clear of the following mistakes.
1. Lacking a clear plan
You’ve probably heard the old adage “failing to plan equals planning to fail.” Real estate investment is a huge undertaking. As such, one of the worst mistakes you can make is letting emotions get the better of you rather than having a clear plan in place.
Purchasing a commercial property without doing your due diligence and a plan for the future is a serious mistake that can not only hurt your wallet but also your business.
2. Failing to have a realistic budget
Failing to get your finances in order can lead to thousands of dollars in loss. While drafting your budget, do not make the mistake of only looking at your purchase costs. Be sure to take into account the additional expenses such as taxes, insurance and closing costs.
Additionally, keep in mind that you might need to customize the property to suit your business needs. So be sure to take this cost into account, too.
3. Skipping your due diligence
It’s not uncommon for investors to fail to understand the commercial real estate market trends. This happens when you rely on market hype while making an investment decision. However, as with any investment, it is important that you thoroughly do your homework before putting your money on the property.
Some of the things you need to consider while exercising due diligence include:
- Local, state and federal regulations
- Proximity to your target market
- Land zoning ordinances
Commercial real estate investment is a resource-intensive endeavor. Find out how you can safeguard your rights and interests while investing in commercial real estate.