Buying a commercial property is quite different from buying a conventional home. Although the core steps remain the same, there are a few differences to keep in mind—and here at HTR Commercial, we specialize in helping buyers make the right investment for their unique needs.
Have questions about commercial buying? Take a look at some of our most frequently asked questions to get the answers you need. And if you don't see what you're looking for, just drop us a line!
Frequently Asked Questions from Commercial Buyers
1. Is commercial property a good investment?
- Generally speaking, real estate is always considered a great investment because it's a tangible asset.
- Purchasing commercial real estate is an easy way to diversify your portfolio, and it usually increases in value over time.
- Certain commercial properties can be more valuable than others. If you're purchasing commercial real estate as an investment, speak with your agent or financial advisor to get more personalized advice.
2. What factors should I consider before I buy?
- When it comes to buying a commercial property, it's all about location. An ideally located property will hold its value, and if you're using it as a place of business, it could also be more profitable.
- If you're looking to rent out your commercial property, consider its profitability. Certain types of real estate (like warehouses or multi-family dwellings) are always in high demand, and they may even have existing tenants.
- You should also think about how a particular property will fit in your investment portfolio before you make a big purchase. Certain types of properties come with tax benefits, as well as a few other financial perks. It could be worth hiring an underwriter to calculate your expected return on investment.
3. What are my financing options?
- Commercial buyers can take advantage of a wide variety of loans. These loans can be used to purchase or renovate a property, and they usually last between five to 20 years.
- Commercial loans require a bit more scrutiny. Most lenders will look at your business's finances (if you have one), your personal finances, and your credit. The application process is largely similar to a residential loan.
- Most commercial buyers get loans from a bank or a commercial lender. However, the Small Business Administration also offers government-backed loans (like SBA 504 or SBA 7(a)) for certain buyers.
4. Should I still work with an agent?
- Absolutely! Even if you're a seasoned investor, it's still a good idea to work with a real estate agent throughout every step of the transaction.
- It's best to team up with an agent who specializes in commercial or investment real estate. They'll have the expertise you need to make an informed purchase.
- Looking for the right agent? Take a look at our qualifications or give us a call to get started!
5. How does commercial buying differ from residential real estate?
- Commercial and residential real estate largely differ in price. While commercial properties are generally seen as riskier investments, their higher cost will yield a greater profit over time. And if you're renting out your property, business tenants also tend to pay more than residential tenants.
- Commercial real estate usually requires bigger loans, and the amortization period is longer than the loan itself.
- In a legal sense, residential real estate encompasses all single-family dwellings and one to four-unit rental residences. Commercial real estate is defined as a multi-family dwelling, an office, retail or industrial space, or another business-focused property.
6. Should I hire a property manager?
- If you're planning on renting your commercial property out to tenants, you need to consider your level of commitment.
- If you don't have landlord experience or don't want to oversee your investment full-time, it could be worth hiring a property management company to handle all the details for you.
- Property managers will help you find qualified tenants, handle repairs, and collect rent on your behalf. If this sounds like the right option for you, ask your real estate agent for some recommendations.
7. What should I know about zoning?
- Before purchasing a commercial property, you need to take a closer look at its zoning.
- Zoning, which is determined by local government, outlines what can or can't be built in a certain area, how the property can be used, and how the aggregate of buildings within a certain district must relate to other districts.
- Residential, commercial, agricultural, and industrial are a few of the most common zones. Be sure to talk to your agent about your needs as you search for the right property—they can help determine what type of zoning is best for you.
I Still Have Questions!
Don't worry—we have answers! Contact HTR Commercial today with any questions you might have. We look forward to helping you navigate the unique and exciting world of commercial real estate.
Need to sell a commercial property? We'd love to help with that, too!