The commercial real estate sector can provide a solid opportunity for financial growth. Those looking to invest in this market can learn from others’ mistakes. Some of the more common that apply to pretty much every commercial real estate deal include the following.
#1: Not getting zoning figured out before the closing.
Do not close on the property before you are certain the zoning regulations are in line with your expectations. It is not easy to change zoning ordinances that impact the property and generally best to avoid a piece of real estate that does not meet these needs.
If looking to change the zoning, try to get it done before you finalize the deal. As noted in a recent article that explores this possibility as used by another real estate developer, this process can require paying a fee to get an extension on the closing date. Although non-refundable, it is an investment that will likely pay off in the long run.
#2: Not getting records in order and establish a relationship with a bank or other financial institution.
Funding is a critical part of the deal, and a failure to get financial paperwork in order and build a relationship with a financial institution or other lender that will help provide funds is a surprisingly common mistake. Take the time to get finances in order before moving forward with the deal to save yourself from this hurdle.
#3: Failing to delegate.
There are certain parts of the process that is often best to delegate to professionals, like completion of due diligence. Although you may save money in the immediate by taking on these roles yourself, a failure to do a thorough job and get all the information you need could translate to a big expense after the deal is done. When it comes to due diligence, this could include issues with the title or environmental problems on the property that require expensive clean-up.