An Office Building Checklist for Purchasing Commercial Investment Real Estate

 An Office Building Checklist for Purchasing Commercial Investment Real Estate

Commercial investment properties, like small office buildings, are more appealing to many investors than residential homes. Tenants tend to renew more frequently, and there are less complications, with the typical lease being three to five years. Even if it is not feasible to do so with residential buildings, it is standard practice to charge business tenants for all repairs and their proportionate part of yearly expenditure increases.



It may be as simple as taking a long trip down a major highway to locate a commercial investment property, depending on where you live. If there are not many signs advertising commercial real estate for sale in your neighborhood, try looking for one in the phone book. There are a lot of houses on the market right now, and the buffet is open if you are ready to buy.



Some office buildings are rather modest, with just one or two tenants, while others are quite huge and house numerous smaller offices. While both options provide a reliable stream of income, the bottom line will be less affected by tenant turnover if you have a number of smaller offices. It is imperative that you conduct thorough research before investing in any business property, but notably in an occupied one. If you are on the market for an office building, here is a handy checklist to go through.



* Before signing any lease, be sure you can and will meet all of the terms. If you are prepared to keep the property in the same condition or at least negotiate the conditions, you may be able to keep your long-term tenants from fleeing when you purchase.



You can discover potential cash flow issues by reviewing the payment records of your tenants over the last two years.



* Find out how well the building has been kept by looking at the maintenance records from the last two years. You should reevaluate the property if records are unavailable.



* Collect all five years' worth of property tax notices. A tax lien is the last thing anyone wants because it can freeze your deal.



* Get copies of any claims by reviewing insurance policies and obtaining authorization to do so. Please confirm that there is no active litigation involving the property. Last year's slip and fall may have cost you in the end.



Join the owner for a comprehensive tour of the office. The purpose of this inspection is to assess the quality of the renters and identify any obvious issues, however a professional inspector is still necessary.



Investors desiring to go into the commercial real estate market should be prepared to face far more challenges than those involved with residential real estate, but the potential rewards are substantial.