Like any other investment, purchasing a commercial property requires a lot of research and knowledge in order to be successful, especially when it comes to both time and cost. There are a number of factors to consider, including where you want your business to be located, and how much money you can bring to the table, so it is essential to do your research.
Here are McEwan Fraser Legal’s top 10 tips to consider when buying a commercial property…
- Think about Location, location, location
Finding the perfect location is very important when purchasing a commercial property – just as important as when buying your own home. Think logically about what you will be using the premises for, and ask yourself the key questions, such as will there be enough space for the staff, and will clients be coming for meetings frequently? Is this location where you want to bring your clientele? For the most part, a central location is desirable, however, if you are spending most of your time dealing with clients remotely, a location set outside of town may be a better, and a more cost-effective, option.
- Do your research and consult experts
Researching is vital. Look into long-term predictions for the location you are viewing the property in – is there anything that may help or hinder property values in the future? A decline in value of your commercial property could decrease your business capital; time spent on researching the perfect location for your new business base is never time wasted.
Also, don’t be afraid to contact experts and professionals who have years of experience investing in commercial property. They’ll put you on the right track.
- Take advantage of low interest rates
When considering purchasing a commercial property, it is wise to keep a close eye on interest rates as they are constantly fluctuating. Although they won’t stay constant for a long period of time, it makes a mortgage an attractive option. Re-mortgaging your property will help to increase additional capital, which will be considerably cheaper than a business loan. If you do eventually decide to invest, you can deduct the tax from interest payments on commercial mortgages, which is highly beneficial.
- Think with your head, not your heart
It is vital to be rational – don’t just jump head-first into buying a commercial property without doing your research and considering other options. In the short-term, buying a commercial property with a mortgage will undoubtedly exceed the cost of renting the same property. If your business is well-established, with the potential to grow, it is worth investing. However, if you are looking to set up a start-up, this is something to think about – it may be wise to rent in the short-term, then consider investing in a commercial property later on.
- Flexibility is key
When viewing a commercial property, it is important to look for premises that are flexible. It is inevitable that your business will expand and change whilst you are occupying the property, so it is crucial to find premises that can be modified over the years to suit your business.
- Don’t forget the deposit
Some businesses find it easy to forget that you will need to place down a large deposit, just like you would with a residential property. Think about how much money you have available, and whether you would be able to put down a substantial deposit. Remember, mortgage-lenders tend to ask for a deposit of 20% or more of the value of the property and may even ask to see a business plan.
- Get the commercial property surveyed
It is vital that you have a full professional survey carried out on the commercial premises before making a purchase. A basic survey will not do, especially when you are spending a considerable amount of money investing in the building. Whether it is commercial premises or a private home, a survey is always a wise precaution to check for any problems before they arise.
- Can you sub-let the premises?
If the commercial property you are looking at purchasing is too big for your business at present, but you wish to grow, it may be worth looking into sub-letting. This can help to manage any cash-flow challenges and maintaining flexibility in your premises. However, this isn’t available for all commercial property, thus you will need to check with your mortgage-lender first and read your lease carefully for any clauses that may prevent sub-letting.
- Don’t forget to budget
Commercial property purchases are rarely cheap. Remember to budget for any new furniture, as well as long-term upkeep and ongoing costs which will inevitably incur, just like in a home. Having some extra money in the bank can help to avoid any situations that may arise.
- Consider parking
Parking is easily forgotten about. If the location of the property is near to a public transport, such as a train station or a bus stop, there are ways for employees to travel into work, however, if you are based in an out-of-town location, a car park is valuable – not only for staff but for clients visiting too.
Finding Your Ideal Commercial Property
At McEwan Fraser Legal, we don’t just specialise in residential properties but also commercial properties. We currently have a number of commercial properties currently on the market with us:
Duchally House, 3-5 Wellington Road, Nairn, Highland, IV12 4RE
Drumnadrochit Boarding Kennels & Cattery, Tor-Nam-Breac, Bunloit, Drumnadrochit, Highland, IV63 6XG
Atholl Filling Station, Main Road, Dunvegan, Isle of Skye, Inverness-shire, IV55 8WA
MacLeods View, Dunvegan, Isle of Skye, IV55 8GT
Pilmuir Street Guest House, 80 Pilmuir Street, Dunfermline, Fife, KY12 0LN
Panda Valley Takeaway, 114 Rosemount Place, Aberdeen, Aberdeenshire, AB25 2YW
Bay House Hotel, 56 Victoria Parade, Dunoon, Argyll, PA23 7HU
The Bean & Leaf, 6 The Promenade, Gallowgate Street, Largs, North Ayrshire, KA30 8BG
Childrens Playhouse, 12 Kilnholm Place, Cumnock, East Ayrshire, KA18 1PA
The Shore at Carronshore, 195 Carronshore Road, Carron, Falkirk, FK2 8ES
If you would like more information on the above or would like to discuss your affairs in general, please contact our commercial team on 0131 524 9797.