Finding a new location for your business can be an exciting proposition. Like buying a house, you’ll discuss your needs with a skilled broker. You will tour buildings, laugh at bad paint and carpet, pick up some design ideas, and hone in on the best location. You will put in a competitive offer, and *boom* be at the closing table in a couple of months.
Experienced commercial real estate agents know that the process is usually more complicated than this.
Here are five things to consider before setting out to buy or lease a commercial property:
1) It’s a long process and oftentimes, deals can stretch beyond a year. Allowing plenty of time for the deal will take some of the pressure off. Below is a fairly typical timeline for purchasing a commercial property.
- Site Selection | Two to six months
- Deal Negotiations | One to three months
- Due Diligence | Two to six months
- Closings | Two to four weeks
2) Select a broker that doesn’t just exclusively focus on CRE but specializes in the asset type you are buying.
You would not let an ear doctor operate on your knees or have a motorcycle mechanic work on your car. Don’t let someone who does not specialize in the specific asset type advise you on your commercial property purchase or lease. Office buildings, retail stores, and industrial buildings all have unique components that specialists understand.
3) Never put all your eggs in one basket. Deals sometimes fall through and often for reasons that could not have been anticipated by the buyer or seller (COVID anyone?). Have a plan A, B, C, and D.
4. Hire the best help.
A good attorney, CPA, inspector, and contractor may add a lot to the acquisition costs but can save thousands, or even millions, by seeing what other people miss. The acquisition process is not a place to save money.
5. Trust the process and don’t lose sight of the goal
The process can be a roller coaster with big and small surprises, disappointments, losses, and victories. Some details that seem important may end up inconsequential in the end. Do not get hung up on details that don’t matter.
Don’t get stuck on feeling like you are winning or losing in negotiations. Remember that the goal is to get the right property for your business. Trust your advisor, attorney, and CPA. Try to enjoy the process and keep your eye on that end goal. Business can be fun if you let it.
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