Although there are challenges to buying any type of property, purchasing commercial real estate can be especially complicated. After serving as the top commercial realtor in Lexington, KY, for more than 60 years, Winmar Corporation has witnessed many of the same errors made repeatedly. They work hard to prepare their clients for a successful transaction and help them avoid these blunders. Below, they go over some of the most common missteps to avoid when investing in commercial real estate.
3 Common Mistakes Commercial Real Estate Investors Make
1. Failing to Understand Lender Requirements
Lenders typically have specific requirements when it comes to approving loans for commercial real estate. It’s essential for buyers to find out exactly what their lender will be looking for to determine whether or not a certain property is a good investment. This will prevent them from having to encounter any surprises with their loan application further on down the road.
2. Miscalculating Property Value
One of the biggest mistakes a commercial real estate investor can make is not accurately calculating the value of a property. Neglecting to do the appropriate research on a listing will make it difficult to know what to offer, which often means the buyer ends up paying more than the property is worth. It’s crucial to review comparable sales in the area and the condition of the property before settling on an offer amount.
3. Overlooking Unexpected Expenses
There are many more expenses associated with buying commercial real estate than the purchase price. It’s crucial for investors to make sure they are factoring in cash flow for any unexpected costs that may arise during ownership. This includes things like maintenance fees and shortfalls from tenant vacancies. Having to suddenly come up with cash reserves can lead to serious financial strain.
Steering clear of these errors will make it easier for commercial real estate buyers to manage their risk and reach their investment goals. If you are interested in purchasing commercial property, the professionals at Winmar Corporation are available to offer invaluable advice and guidance. Contact them at (859) 254-5755, or visit their website to learn more about their current listings.