If you're currently sitting on the fence wondering whether investing in commercial real estate is worthwhile, here are some facts that might persuade you. The commercial real estate industry is set to reach a worth of over $25,8 trillion (yes, trillion) by the end of 2024. In the United States, the real estate sector is on track to generate the highest value, globally by the end of this year.
In other words, there is no time like the present to invest in commercial real estate-it's one of the most prolific industries in the United States. This being said, commercial property due diligence is more important than ever as investment is on the rise.
What exactly does it entail? Here's what to prepare yourself for if you're looking to purchase commercial real estate.
Enlist a Due Diligence Team
In order to determine the true extent of how worthwhile your investment is you need the right people to advise you. Build a due diligence team that can help you make the best decision. This generally includes:
- A commercial real estate agent who has experience in finding the best properties, determining accurate market value, and top-notch negotiation skills
- A commercial property solicitor to help you review contracts, and legal paperwork, and assist with permits, etc.
- A property surveyor to assist in the physical inspection of the property and to advise on any future structural issues that could arise
The reality is that investing in commercial real estate is an expensive endeavor. You need to do your due diligence and make sure your investment is a good one by enlisting professionals who understand this process.
Never Skip the Property Inspection
This is one of the most important steps in the due diligence process. Hiring a property surveyor who knows what to look for during a property inspection is paramount. This step must be at the top of your commercial real estate checklist.
The surveyor will take the time to thoroughly inspect the property to get a true feel for its physical condition as well as the building's overall structure. They'll assess factors such as plumbing, electrical systems, structural setup, and more.
All of this information will give you insight into whether you're making a solid investment, or whether you could be facing a financial black hole in the future.
Prioritize the Environmental Assessment
Another important step in investment property analysis is an environmental assessment. What does this entail? It's basically an assessment of any potential environmental concerns linked to the commercial property you want to buy.
This is especially important for older properties or those situated in industrial areas. A commercial property surveyor will take the time to assess potential hazards that could present themselves down the line, such as:
- Soil contamination
- The presence of asbestos
- Hazardous material leakages
- Safe and healthy work conditions
This inspection is important to understand the potential hazards and issues you could face when purchasing the property. It's also important to help you understand planning, permission, and permit issues.
Always Review the Financials
Another one of the top property evaluation tips to keep in mind is the financial review. Taking a deep dive into the financials of the property is absolutely key to understanding whether it's a worthwhile investment on your end.
This review takes a look at the property's income and expense statements, tax records, and outstanding assessments or liens that are due. A financial review is also important in fully understanding the property's true market value and whether you could make a good return on investment.
Need Expert Advice on Commercial Property Due Diligence?
Whether it's commercial property due diligence, tenant placement, property maintenance, or vacancy marketing, our team at PMI Tampa Bay has you covered.
We also offer strategic consulting, financial reporting, and asset management to help you make the best investment and reap great dividends. Whether you're a first-time investor or an experienced one, reach out to our team today for the professional expertise you never knew you needed.
