commercial real estate buyer representation, commercial real estate due diligence, what is due diligence, buying a commercial property, buying commercial real estate, buying a commercial building, how to purchase commercial real estate, investing in commercial real estate, commercial real estate investment

What is Buyer’s Due Diligence and Why Should You Care?

I’ve heard there are more millionaires made selling cardboard than Cadillacs. Writing about due diligence made me think of that because it’s pretty boring, but it’s where all of the profits are. Done well, due diligence will make a good deal, great. On the other hand, if done poorly, it’ll cost you a fortune and put you out of the commercial real estate investment business for good.

So, What is Buyer’s Due diligence?

Well, when you put a commercial property under contract, you usually have a period where you can back out of the deal with minimal penalties. That is your due diligence period. This is when you ask the seller everything about the property, but more importantly, you get them to verify the claims they are making. Due diligence is simply making sure you get what you pay for.

When you do it right, you have a checklist. A big checklist, with lots of sub checklists, on every aspect of the purchase. You’re verifying things like leases, rent history, bank statements, utility bills, permit drawings, warranties, certificates of occupancy, tax appeals, operating expenses, and hundreds of other details about the property.

Never Assume Anything

You can’t assume anything you’re being told is true. Your seller is always going to paint a rosy picture, leaving out the ugly details. Your job is to uncover those details because every one of them will eat into your deal, making the property more expensive than you actually think it is. Whatever you catch in the due diligence process, you can try to get a discount on your contracted price. But if you don’t catch it, well, then it becomes your problem after closing. Caveat emptor or buyer beware.

Sure, it’s time-consuming. Sometimes a seller doesn’t want to provide the necessary documentation. Sometimes, after all of your hard work, you come to realize you should walk away. But seriously, wouldn’t you rather know that before the close, and not after?

Commercial real estate is an expensive investment. You need to make sure the buyer’s due diligence is complete to prevent a good deal from turning into a disaster. Unfortunately, very few brokers or buyers do it well, if at all.

Get What You Pay For

To make sure our clients are getting what they pay for, we have an extensive checklist that we run our buyer clients through. If you want to learn more, check out our reviews, then ask us to help you today.

Should You Buy Or Lease Commercial Real Estate For Your Business?

Should You Buy Or Lease Commercial Real Estate For Your Business?

Many of our tenant clients confess to us that they have wondered if they should buy or lease commercial real estate. It’s a common question you hear brokers often ask. “Why lease when you can own”, they ask? This is not a bad question. It’s just an oversimplification. It’s not apples to apples. Let’s take a quick look at the pros and cons to see if this is even something that is worth considering for your business.

Owning Commercial Real Estate

Some of the obvious benefits of owning commercial real estate would be that you’d be able to put that rent money toward paying off your mortgage instead of your landlord’s. You’d enjoy the tax advantages of being an owner. You wouldn’t have to get permission from a property manager to make modifications. And if you purchase a multi-unit building, you’d potentially receive rental income from your tenants.

Leasing Commercial Real Estate

However, with rights come responsibilities. As an owner, it’s not as easy to just pick up and move if you outgrow your space. Your upfront costs are far greater than leasing. You are responsible for things renters don’t have to consider. Renters do not think about mortgages, landscaping, security, utilities, deposits, taxes, insurance, maintenance, and possibly vacancies.

Of course, there is a whole lot more to this topic. In the final analysis, owning commercial real estate is a whole other business line. About 20% of US companies own the building they work in. The other 80% would argue they’d prefer to focus on their main business, and leasing makes it easier for them to do that.

Find out if Buying or Leasing is Best for Your Business

Since conventional wisdom holds that it takes about seven years for owning to outperform leasing, that’s probably the place to start your consideration. To discuss further whether owning makes sense for your business or if you’d like to look at space to lease, we certainly can help you with that. Check out our reviews and then ask us to help you today.