Update: We've launched a video series called the Small Business Owner's Guide to Leasing Commercial Real Estate which you can view here. You can also check out our Commercial Leasing Tips page for tips on leasing that we hear most often. Are you looking to purchase or lease real estate to build or relocate your current business? If so, you probably have questions you’d like answered. However, you may not even know which questions to ask! Read on to find some of the most frequently asked questions and answers when it comes to commercial real estate.
What is the Difference Between Commercial and Residential Real Estate?
Residential real estate refers to any property where someone is living. This is either the owner of the home or someone who is renting or subletting. Property that is being used in business dealings is commercial real estate. This can be a business that is retail, office space, industrial property, or even a farm. Additionally, it could even be property like an apartment complex being held for business or income-producing purposes.
What Should I be Aware of When Purchasing Commercial Real Estate?
One thing to look out for is zoning and land use restrictions. Your business may be subject to certain legal restriction based on what you are producing. Therefore, you may need to file public permits and make sure that the location is zoned properly for the business you intend to open. I've seen businesses get shut down after spending a lot of time and money to get open, simply because the space they occupied did not permit their use.
When purchasing commercial real estate, much like residential rental investments, you will most likely take out a loan. One thing to consider is what type of collateral your lending agent will require. Most likely, the lender will want a mortgage or deed of trust on the property you are purchasing. Some lenders do not allow the purchaser to borrow additional money for the property. This might be a problem if you require additional financing to expand your business.
Another thing to be aware of? The fact that commercial buyers or lessors are generally considered to be more knowledgeable about the transactions they are making. Plus, it is generally assumed that they are being represented by legal counsel. Although most states have legislation designed to give homeowners and renters protection, this may not hold true for people buying commercial real estate.
Will I Work Directly With the Property Owner?
According to the Office Space website, most real estate property owners generally hire real estate agents to work on their behalf. These agents are legally bound to have a real estate license issued by the state they are doing business in. They have licensing and educational requirements that must be met in order to have agents work for them. Agents must also have a certain number of educational credits to renew their license. This ensures that the agent stays on top of rules and regulations that are important to know when making real estate transactions.
Should I Go Through A Real Estate Specialist?
Because of the special considerations involved with purchasing or leasing commercial property, you will want to trust your business to someone who knows the legal aspects of the commercial real estate business. Are you looking for help in buying or renting commercial space in Nashville or the surrounding area?