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April 9, 2020 by nvh2

3 Commercial Real Estate Red Flags You Should Keep an Eye Out For

When a person decides to purchase or lease a new commercial property, it can be one of the most expensive investments they will make for their business. This is why it is so important to make sure that you are getting what you pay for. Unfortunately, one of the pitfalls of being a new buyer is not being able to see some of the most common red flags. The following list includes three commercial real estate red flags you should always keep an eye out for.

Problematic Areas

Most of the time, red flags within a commercial property will be in the details. These problematic areas can seem okay at a glance but can actually be at the brink of disrepair. An issue that will come up a lot is amateur repairs or additions to the property. Some businesses do not want to pay thousands of dollars in repairs and thus will attempt to cheaply repair certain areas. Although some jobs might be satisfactory, you should always ask for work permits and city inspection documents to have concrete evidence that everything is up and running correctly.

Major Damage

Although you should focus on the details, there are major areas that cannot be ignored. One of the most important ones of these includes the roof. Roof damage can do considerable damage to your business if you are planning to store products within your commercial property. An additional red flag you might run into is the seller attempting to fix the roof in order to close the deal. While roof repair can help, it can’t fix everything. Once water penetrates the building, a broken roof might be the least of your problems. Water can run down walls and destroy pipes and create dangerous mold.

Maintenance Agreement

Before you sign on the dotted line, you should always make sure to ask about who is liable for regular maintenance. If the contract places you as the responsible party to repair issues within areas such as the HVAC systems or plumbing, you might want to renegotiate your contract. This attempt to place this workload and cost on you can be seen as a red flag.

Purchasing a commercial real estate property can be quite an expensive endeavor, and thus it’s important to protect your investment. Apply the information above to help you look out for common red flags.

Looking for great business properties? Browse opportunities here!

Filed Under: B&H News, General, Multi-family Housing, Redevelopment, Restaurants, Retail Tagged With: apartments, business owners, commercial real estate, property management, Redevelopment, retail real estate

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