Like all property searches, finding the right commercial real estate (CRE) space to add to your investment portfolio takes time and effort. Before even starting your search, there are important considerations to keep in mind, including understanding your motivations behind pursuing a CRE investment.
Once you’re ready to take action and have armed yourself with a good team, good strategy and adequate financial backing, it will be time to ask the tough questions about the properties you’re pursuing. Here are some you shouldn’t forget to ask.
Why is the CRE property for sale?
As with all investments, there are many reasons to sell, and while it is usually difficult to learn the real reason someone is selling their investment, doing thorough due diligence and going over the property’s current lease agreements thoroughly will give you a better picture. The more you know, the more successfully you can negotiate the deal. On the other hand, you may discover in the course of the due diligence that there are simply too many red flags for you to pursue the property.
Are there currently tenants in the property, and if so, who are they?
Purchasing a property that already has an existing tenant and lease agreement in place is not necessarily a bad thing, but it’s imperative to know what you’re getting into. While many professionals, including financial institutions, think it’s beneficial to purchase leased properties because you will already be generating income on day 1, there are other considerations that are important.
One thing to keep in mind is that you have to honor a tenant’s existing lease terms until you are able to negotiate a new agreement. That means there will be less flexibility in terms of potentially raising the rent, finding a better tenant, or passing on other costs to the tenant until a new agreement can be signed.
Commercial lease agreements are often 3-5 years (or longer) in length, so it’s essential to consider all possible options when it comes to your commitment to the existing lease. This is a key reason we advise consulting with a commercial real estate attorney before committing to a real estate transaction.
What are the zoning ordinances for the property?
The city of Miami has strict zoning laws, which can potentially complicate an investor’s plans if you are not knowledgeable of the local code and land-use requirements. Spend significant time familiarizing yourself with local zoning laws and partner with a local general contractor who can advise you on building requirements and restrictions.
Purchasing commercial properties in Miami requires you to be competitive, but you shouldn’t sign a deal you don’t have all the details on. Consult local professionals who can advise you on the Miami market and help you negotiate the best possible deal.
When you’re ready to invest in the SoFla commercial market, come talk to us at the Law Offices of Alex D. Sirulnik, P.A.. We partner closely with investors and intermediaries to assist in the successful purchase of their commercial property.