Good properties move quickly in today’s rapidly evolving commercial real estate marketplace. This can make it seem like investors willing to move similarly quickly could benefit from skipping lengthy or unnecessary parts of the purchasing process. However, we recommend you take the time for due diligence before buying a building.
Due diligence is not a skippable processes.
While you may feel that due diligence rarely reveals vital issues, when it does uncover a concerning situation, it’s well worth every moment spent.
Due diligence informs your future experience (and expenses) as a property owner. Knowing your exact future costs will help you determine whether a particular property will be profitable. After all, hidden repairs and issues can be catastrophic and cause the financial benefits of your property to plummet.
Don’t let that happen. Perform due diligence before buying a building, and you’ll know everything you need to know about the expected value of your property.
Perform These Searches for Thorough Commercial Property Due Diligence
- Order a preliminary title report for your prospective property. This report will contain data about the property itself. For example, if the property is under any easements, liens, or encumbrances, the title report will provide needed information.
- Obtain a professional land survey. Especially if you’re purchasing a larger property, you need to have a dated, detailed record of every single square foot of land. A professional surveyor will be able to confirm the lot size, any waters on your property, the existence of any access roads, and other pertinent information.
- Learn as much as you can about laws in the area. As a purchaser in a specific neighborhood or region, you will need to know about any unique laws that could affect your real estate transaction or the way you can manage or use your property. Request comprehensive documentation for zoning rules and property codes from your local municipality. This will also help you realize whether you’ll need additional licenses or permits to use your property as planned.
- Review the history of rent payment for your property. If you’re planning on using your commercial property to produce rental income, you’ll need to know whether you can expect a predictable flow of on-time rent. If you can obtain the seller’s financial records, you may be able to glean this data.
- Review the local regulations regarding ADA compliance. In the United States, property owners will need to keep their land and buildings up to compliance with the Americans with Disabilities Act. You’ll need to be aware of both federal and individual state regulations.
- Inspect the pre-sale status of any buildings or assets on the property. Having a professional inspector comb over every inch of the buildings you’re purchasing can save you time and money later. Make sure they check all major building systems and often-missed areas, such as parking lots and other exterior fixtures.
- Learn as much as you can about the seller themselves. While you’re not necessarily entering into an ongoing relationship with the previous owner, learning about their track record can tell you a lot about the property or your likelihood of success while owning it. Read up about their reputation, their past litigation history, and service contracts. In addition look at any other documents that illustrates the way they’ve used the property and their related financial status.
Performing all of these investigative activities can seem like a lot of work. It is. However, taking the time to put together a comprehensive picture of your new property’s past will help you see its probable future. This, in turn, will help you determine whether your new property is a good deal or not. As a result, you’ll be able to enjoy increased confidence in your real estate transaction.
Get What You Pay For with the Help of Attentive Commercial Real Estate Experts
At McBride & Ceballos Commercial Real Estate, it’s our goal to promote transparent property transactions for each of our buyer clients. In fact, to make sure you don’t miss a single thing, we’ve curated an extensive due diligence before buying a building checklist to support the quality of your purchasing experience.
Are you interested in learning more about how we can support you? Connect with McBride & Ceballos Commercial Real Estate today at 404-275-0079 or contact us online.