Many buyers think they have all the time in the world when it comes to making a commercial real estate transaction. They’re sadly mistaken. Some transactions ensue in a very short period of time, and buyers are caught by surprise, unprepared and frantic. So you don’t find yourself in this unfortunate position, here are three simple tips to follow:
1. You should be PREQUALIFIED by a lender for your loan so you can strike and react quickly. It takes roughly 2-4 weeks (and sometimes longer) to get prequalified. This upfront investment in time conveys you are serious and ready to buy. Being preapproved also allows you to react quickly in that you have the financial backing ready to go so when you find the place you’re looking for you can pounce before any other offers hit the table.
2. Understand all of the COSTS and expenses— for example, know what the common area maintenance (CAM) charges include, and more importantly what they do not include. Will they include air conditioning repairs? Window washing? Exterior paint when it’s needed? These are important questions to ask so you can asses all of the potential costs.
3. You need to have RESERVES for unforeseen expenses. Even if you have gone over the costs and expenses before jumping into your new real estate investment, know that there is always the possibility of something going awry. For instance, what if an AC unit goes out unexpectedly and you need it fixed immediately? What if the plumbing springs a leak? What if the CAM expenses increase? What are you going to do? Do you have a reserve? Answer: You should.
The main point I’m trying to make is, simply, be prepared, be over prepared. There are a lot of variables within a commercial real estate transaction, and if you’re prepared, you will be ahead of the game.
Anticipate more helpful hints regarding your transaction, coming soon.