Phone888.995.7575

November 9th, 2023 at 11:00 am

Wondering how to buy commercial real estate but don’t know where to start? Discover all the tips for buying commercial property you need to know in our guide.

The real estate market landscape is in a constant flux, and while most people are vaguely aware of residential real estate, commercial real estate and purchasing commercial property can be a bit of a mystery. Everyone needs a place to live, sleep, and raise a family. Not as many people own a business, and even those that do own their own business don’t necessarily need to buy up commercial real estate as a business owner. Many companies are happy to rent office space for their needs.

The process of buying commercial real estate can seem confusing and intimidating — maybe more so than purchasing a home. While there are things you should absolutely keep an eye out for, commercial real estate can be much easier to navigate when you are partnered with the right Commercial Specialist. Learn more about how to buy commercial real estate below.

Commercial vs. residential real estate

Residential real estate describes any property designed specifically for housing people. This residential property includes single-family homes, condos, apartments, and vacation homes—all of which provide the opportunity to enjoy the benefits of owning a home. Commercial real estate refers to any commercial real estate property that is designed for conducting business, including office buildings, warehouses, restaurants, and strip malls.

The one sticking point is multifamily units. Multifamily properties with five or more units are considered commercial real estate despite the fact that they are designed for residents. Hotels and motels are also considered commercial real estate.

Why buy commercial real estate?

For a real estate investor, purchasing commercial real estate can be lucrative. With a commercial real estate investment, you collect rental income from businesses that use the space and, when the property gains value, you can make profit from a sale. Most businesses are fine with leasing commercial space for their specific needs, but buying real estate for your business actually comes with a ton of benefits.

You should consult with your accountant before you make a purchase, but it’s worth asking yourself why you want to buy or invest in commercial spaces in the first place.

Consider your financing options

Even before you check the classifieds or dip into the existing market offerings, it’s a good idea to look into your financing options. You might not qualify for certain types of financing or run into other hurdles later on, but our Commercial Partners are here to help you with your specific needs.

The main thing to look at when considering financing is your own credit. Depending on the type of loan you apply for and the lender, your business credit score and credit reports may come into consideration. Some lenders even check your personal credit. Of course, you still have financing options if you have bad credit, but you might have to contend with higher interest rates or down payments.

Once you have a good idea of your credit score and general credit information, you can begin to look at how to get a loan for commercial property or other financing options available. The type of loan that you ultimately settle with will depend on a variety of factors, including the type of property, your credit, and your business history. These include:

If you are already an established, profitable business, your best option is a Small Business Administration loan. The SBA offers the lowest borrowing costs, allowing you to borrow up to $5 million to buy real estate or refinance existing loans on real estate. The APR on these loans is low and comes with a 25-year repayment plan, which all ultimately results in lower monthly payments than typical business loans. Qualifications for an SBA loan include:

You can also find loans geared specifically toward renovation costs. Funding Circle offers loans of up to $500,000 with five-year repayment terms.

Build a team

As you get your finances in order, start building a team of experts to help you on your journey. Finding commercial real estate can be extremely complicated on your own because it involves specialized knowledge that you probably don’t have. Some people to include in your team:

If you’re not sure where to start, any Commercial Associate at Berkshire Hathaway HomeServices California Properties can set you on the right path. Our Commercial Division consists of a highly experienced team of agents with the experience, training, and expertise to guide you through every step of the process. We can provide you with the tools and knowledge necessary to navigate the market and find the perfect investment for your business.

Finding your team before you start looking for a property ensures that you have all right help up front. You don’t want to find a promising piece of property and then fumble to find a trusted, knowledgeable person to answer your questions (and likely miss out on the property in the process). Assembling the right team allows you to hit the ground running as soon as you find the property of your business dreams.

Find the right property

You have identified your financing options and found the right team to back you up. Now it’s time to look at what the market has to offer. Having a real estate expert, like those in the Berkshire Hathaway HomeServices California Properties Commercial Division, already gives you a leg up. Real estate experts have knowledge of the local area and neighborhoods, and can give you insider information on specific markets. Commercial real estate experts can be even more important, as they have a lot of information about the market that is not readily available online.

Pay attention to location and square footage, and make sure the space can fulfill your specific use needs. Don’t be afraid to lean on a professional for some extra guidance, as there are myriad benefits to working with a real estate agent. Try not to worry too much about property value. With residential real estate, property values are based on the comparable properties in the area, as well as proximity to schools, sites, and other amenities. This makes residential properties more volatile to market trends. By comparison, commercial real estate value is largely dependent on the amount of revenue that it generates. The higher the cash flow for a commercial property, the higher its property value.

Once you do find a promising property, do your due diligence. Research the property’s history and what it was used for before. Research the property taxes and what the property is zoned for. You want to know this property inside and out. While commercial real estate can be lucrative, a bad commercial investment can be much more costly.

Make an offer

Once you have found the property of your dreams and done all the necessary research, you can make an offer. Your real estate agent can help you write up your offer. Depending on the real estate market, you might have to contend with offers from other buyers and deal with negotiations. If you want to give yourself an advantage, submit pre-qualification papers and provide proof that you don’t have contingency on your finances. Once you come to an agreement, be prepared to pay earnest money, which can be up to 1 percent of the purchase price.

Once your offer has been accepted, you enter contingency escrow. This is essentially a period where you can back out of the deal if things go awry. For example, the property may fail an inspection or have zoning issues. During this time, your lender might ask for an ALTA, or an American Land Title Association survey. This survey can provide information about the property, including boundary lines, utility lines, and locations of improvements.

If you choose to waive contingency escrow, you will enter perfected escrow. You can still back out of the sale, but you will lose the money you put down as a deposit.

Closing

If everything checks out with the ALTA and the contingency period, you can proceed to closing. Closing begins the process of signing papers and transferring money from buyer to seller. As soon as you have the grant deed in your hands, you’ve officially become a property owner.

Buying commercial real estate is fairly straightforward, but it can still be a confusing process, especially for first-time buyers. Working with the expert California REALTORS® at Berkshire Hathaway HomeServices California Properties will cover all your bases and provide general peace of mind through each step of the process.

Contact any one of our Commercial Associates today to get started.


Like what you see here? Sign up for more! Our free e-newsletter informs you of listings in your community, insider real estate tips, the latest in home trends, and more.

56 Comments

  • Thanks for your commercial real estate tips. I agree with you that it is crucial to find the right property. I think that it would be very beneficial to find a good commercial real estate company.

  • I wasn’t aware that you needed at least 2 years of business history before being able to purchase a commercial real estate property. Thanks for sharing!

  • The author skillfully breaks down the process into digestible components, covering crucial aspects from due diligence to financing. What sets this guide apart is its emphasis on thorough research and strategic planning, offering readers valuable insights into identifying the right property and making informed investment decisions. The inclusion of real-world examples and cautionary advice adds a pragmatic touch, ensuring that aspiring commercial real estate buyers are well-prepared for the challenges they may encounter. Overall, this post stands out as a comprehensive and accessible resource, catering to both novice investors and seasoned professionals, and demystifying the intricacies of commercial real estate acquisition.

  • Liam says:

    check [Link deleted]for real-estate photography

  • Henry says:

    <a href="[Link deleted]

  • Interesting piece! The idea of delving into commercial real estate is undoubtedly intriguing, but it’s often overshadowed by the complexities it presents. This guide seems promising in shedding light on the process and offering valuable insights. Looking forward to diving in! Also, don’t forget to buy motivation letter for that extra boost of inspiration!

  • I will immediately grab your rss as I can not in finding your email subscription link or e-newsletter service. Do you have any? Kindly let me recognize in order that I may subscribe. Thanks.

  • Thank for giving information about Real Estate ‘This was so helpful. your post clarified everything perfectly.
    [Link deleted]

  • I got what you intend, regards for posting.Woh I am delighted to find this website through google.

  • Java Burn says:

    I’ve been browsing on-line greater than 3 hours as of late, but I by no means found any interesting article like yours. It is lovely value sufficient for me. Personally, if all site owners and bloggers made excellent content material as you did, the web might be a lot more useful than ever before.

  • I like your writing style truly loving this site.

  • I have been reading out many of your articles and it’s nice stuff. I will surely bookmark your website.

  • I have been exploring for a bit for any high-quality articles or blog posts on this sort of area . Exploring in Yahoo I at last stumbled upon this website. Reading this information So i am happy to convey that I have an incredibly good uncanny feeling I discovered exactly what I needed. I most certainly will make sure to do not forget this website and give it a glance on a constant basis.

  • I visited a lot of website but I think this one contains something extra in it in it

  • Great blog! I am loving it!! Will come back again. I am taking your feeds also.

  • kolam4d says:

    Hello, I think your blog might be having browser compatibility issues. When I look at your blog site in Ie, it looks fine but when opening in Internet Explorer, it has some overlapping. I just wanted to give you a quick heads up! Other then that, amazing blog!

  • I like this blog very much, Its a very nice place to read and incur information.

  • Simply desire to say your article is as astounding. The clearness in your post is simply cool and i could assume you’re an expert on this subject. Fine with your permission let me to grab your RSS feed to keep updated with forthcoming post. Thanks a million and please continue the rewarding work.

  • I got what you intend, thanks for posting.Woh I am glad to find this website through google.

  • brawl stars says:

    excellent post, very informative. I wonder why the other experts of this sector do not notice this. You must continue your writing. I’m confident, you have a great readers’ base already!

  • Wonderful work! This is the kind of info that are supposed to be shared around the web. Shame on Google for now not positioning this post upper! Come on over and discuss with my web site . Thanks =)

  • Thank you for each of your work on this web site. My mom enjoys engaging in investigation and it is easy to see why. We all hear all regarding the dynamic method you provide functional techniques through your website and as well attract participation from others on this matter so our simple princess is truly understanding so much. Take pleasure in the remaining portion of the year. You have been performing a superb job.

  • blower says:

    I think other site proprietors should take this web site as an model, very clean and magnificent user genial style and design, as well as the content. You are an expert in this topic!

  • Leanbiome says:

    I loved as much as you will receive carried out right here. The sketch is tasteful, your authored subject matter stylish. nonetheless, you command get bought an edginess over that you wish be delivering the following. unwell unquestionably come further formerly again as exactly the same nearly a lot often inside case you shield this increase.

  • muliaplay says:

    I like this web blog its a master peace ! Glad I detected this on google .

  • This article on buying commercial real estate is incredibly informative and easy to follow. I appreciate how it breaks down the process into clear, actionable steps, from understanding the market to securing financing. The practical tips and expert advice make it much less intimidating for anyone considering investing in commercial property. Thanks for providing such a comprehensive guide!

  • Very nice info and straight to the point. I am not sure if this is really the best place to ask but do you folks have any ideea where to employ some professional writers? Thanks 🙂

  • I?¦ve read some excellent stuff here. Certainly price bookmarking for revisiting. I wonder how so much effort you put to make any such great informative site.

  • Hello! This is my first comment here so I just wanted to give a quick shout out and say I genuinely enjoy reading your posts. Can you suggest any other blogs/websites/forums that go over the same topics? Thanks a ton!

  • I intended to send you this tiny remark in order to say thank you again over the incredible solutions you’ve provided at this time. This is simply unbelievably open-handed of you to allow extensively just what most of us might have made available as an e-book to make some cash for their own end, most notably seeing that you could have done it if you wanted. These strategies likewise served as the fantastic way to be certain that other people online have a similar interest much like my very own to know significantly more on the topic of this condition. I’m sure there are a lot more pleasant times up front for individuals that take a look at your blog.

  • Hello! I simply wish to give an enormous thumbs up for the great data you might have right here on this post. I shall be coming again to your weblog for extra soon.

  • You really make it appear so easy along with your presentation but I to find this topic to be actually something that I believe I’d by no means understand. It seems too complex and very wide for me. I am having a look ahead to your subsequent publish, I will attempt to get the hold of it!

  • I simply could not depart your web site before suggesting that I extremely enjoyed the standard info an individual provide for your guests? Is going to be again continuously to investigate cross-check new posts.

  • I got what you mean ,saved to favorites, very nice internet site.

  • I¦ve been exploring for a bit for any high quality articles or blog posts in this kind of house . Exploring in Yahoo I eventually stumbled upon this web site. Reading this info So i¦m happy to exhibit that I’ve an incredibly just right uncanny feeling I discovered just what I needed. I most no doubt will make certain to do not disregard this website and provides it a look regularly.

  • I not to mention my guys have been following the great techniques on your site then at once got a horrible suspicion I had not thanked you for those strategies. These young boys ended up as a consequence thrilled to see them and have now sincerely been tapping into those things. We appreciate you truly being considerably considerate and for picking this kind of good things most people are really desirous to be aware of. Our own honest apologies for not expressing gratitude to you earlier.

  • Have you ever thought about adding a little bit more than just your articles? I mean, what you say is important and everything. Nevertheless imagine if you added some great pictures or videos to give your posts more, “pop”! Your content is excellent but with images and videos, this site could certainly be one of the most beneficial in its field. Amazing blog!

  • mba Malaysia says:

    Hiya, I’m really glad I have found this information. Nowadays bloggers publish only about gossips and net and this is actually annoying. A good blog with interesting content, that’s what I need. Thank you for keeping this website, I will be visiting it. Do you do newsletters? Cant find it.

  • cbd cannabis says:

    I was just seeking this information for some time. After six hours of continuous Googleing, finally I got it in your web site. I wonder what’s the lack of Google strategy that don’t rank this kind of informative web sites in top of the list. Usually the top web sites are full of garbage.

  • There is noticeably a bundle to know about this. I assume you made certain nice points in features also.

  • Thank you for the sensible critique. Me and my neighbor were just preparing to do some research about this. We got a grab a book from our area library but I think I learned more clear from this post. I am very glad to see such magnificent information being shared freely out there.

  • You should take part in a contest for probably the greatest blogs on the web. I will advocate this web site!

  • It’s arduous to seek out educated people on this topic, but you sound like you know what you’re talking about! Thanks

  • I do agree with all the ideas you have presented in your post. They’re very convincing and will definitely work. Still, the posts are very short for beginners. Could you please extend them a bit from next time? Thanks for the post.

  • It¦s really a nice and helpful piece of info. I am satisfied that you shared this helpful information with us. Please keep us informed like this. Thank you for sharing.

  • Thanks for this post, I am a big big fan of this website would like to proceed updated.

  • I like this post, enjoyed this one thank you for putting up. “The world is round and the place which may seem like the end may also be only the beginning.” by George Baker.

  • You made a few nice points there. I did a search on the subject and found mainly folks will have the same opinion with your blog.

  • I am no longer sure where you are getting your information, however great topic. I must spend some time finding out much more or figuring out more. Thank you for magnificent information I was on the lookout for this info for my mission.

  • You made some decent points there. I looked on the internet for the subject matter and found most people will go along with with your blog.

  • I always was concerned in this subject and still am, thankyou for posting.

  • Please let me know if you’re looking for a article writer for your weblog. You have some really good articles and I think I would be a good asset. If you ever want to take some of the load off, I’d love to write some articles for your blog in exchange for a link back to mine. Please blast me an email if interested. Regards!

  • nonton anime says:

    Some truly nice stuff on this internet site, I enjoy it.

  • I loved as much as you will receive carried out right here The sketch is tasteful your authored subject matter stylish nonetheless you command get got an edginess over that you wish be delivering the following unwell unquestionably come further formerly again as exactly the same nearly very often inside case you shield this hike

  • You actually make it appear so easy with your presentation but I find this topic to be actually something that I believe I’d by no means understand. It sort of feels too complex and extremely vast for me. I am looking forward in your subsequent post, I will try to get the hold of it!

Leave a Reply

Your email address will not be published. Required fields are marked *