What You Need To Know if You Are Purchasing a Commercial Property - Article Banner

Investing in commercial properties is a smart way to diversify your real estate portfolio and increase your earnings. If you’ve never invested in commercial real estate before, you’ll need to spend some time investigating both the sales and rental markets. You’ll need to focus on the type of commercial property you want to acquire. Most importantly, you should surround yourself with experts who can help you navigate the process. 

There’s a lot of potential here, but you have to know how to establish investment goals and make smart choices.

At Preston-Lee Management Company, we’ve spent the last 20 years managing commercial real estate for investors. When you’re looking for a commercial property, we can help you identify the right opportunities and make the best decisions for your investment goals. 

Here are some of the things you need to know before you decide to purchase and rent out commercial space.

Understand the Commercial Property Market 

Due diligence includes understanding the commercial market before you begin your search for a property. Get an idea of what you’ll spend and what you’re likely to earn in rent from commercial tenants. Investigate what types of lease terms are standard. 

Your own finances will be an important part of preparing to invest. Financing a commercial property isn’t quite the same as financing a residential home.  

Find out what types of businesses are renting space in Victorville and the surrounding areas. Are you better positioned when you own industrial or warehouse property? Or do you want to focus on office buildings and retail centers? 

Know the market. Study the trends.

Surround Yourself With Commercial Property Experts 

Interview local property managers and brokers who have experience with the types of properties you’re considering. You’ll want to know:

  • How much you should plan to spend
  • Where you’ll find the best financing options
  • What types of renovations and maintenance might be needed
  • What tenants are looking for
  • How to negotiate for the price and terms you want

Even if you’ve invested in real estate before, market conditions change and so do best practices. Ensure you have a successful experience by working closely with a property management expert and a real estate broker. It’s also a good idea to talk with lenders, contractors, and other industry professionals.

Commercial Property Inspections

Property InspectionDo not buy a commercial investment property without having it inspected. You’ll want to take a close look at it yourself, but you’ll also need to hire a licensed inspector to tell you exactly what you’re buying. There could be deferred maintenance waiting to eat a hole in your ROI.

Start outside. Take a look at the parking lot, walkways, and steps. This is a good time to note any safety issues. How is the exterior lighting? Is there enough security? All of these things should be on your inspection checklist. 

Once inside, make sure there aren’t any trip hazards, electrical issues, or plumbing dangers. Water intrusion will destroy a property faster than anything else, so check for leaks or signs of mold and rot. Discolored walls, soft ceilings, and strong odors should raise some flags. 

Make sure the frame of the building is solid, and check the foundation. If there are noticeable cracks in the walls, floors, or ceilings, have them checked out. Do a sweep of the roof with a licensed roofing inspector. 

Once you’re sure the structure is sound, inspect your functions and systems. This should start with the heating and air conditioning system. You’ll want to check your electrical system as well. Mechanical and plumbing systems also need your attention. Test everything and make sure it works properly and safely. Have your ventilation looked at, and make sure the insulation is protecting your property and conserving energy. 

If you have elevators, make sure those are inspected and their certificates up to date.

There’s a lot to consider, and you don’t want to go it alone when you’re investing in commercial properties. If you’d like some of our experienced and professional help, please contact us at Preston-Lee Management Company. We’ve been providing property management services in the High Desert for more than 20 years.