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The key to being able to buy commercial property successfully is to have thorough knowledge of all the details and potential pitfalls and access to an experienced team of professionals who are experts in their field and can guide you.
We have listed some things to check before you buy commercial property.
When looking to buy commercial property you need to ensure the purchase price is not above market value. This involves analysing the current lease rates, capital rates, net yield, and replacement costs and checking them against recent comparable market evidence.
Ensure the physical aspects of the property are sound and that you are aware of the short, medium and long term CAPEX (capital expenditure) requirements. Before you buy commercial property engage the appropriate professionals to check all the physical aspects of the building and provide a comprehensive condition report and CAPEX forecast.
When looking to buy commercial property check there is no environmental contamination of the property which will require remediation costs.
Before you buy commercial property ensure that all the improvements on the land have full council approval and that the tenant is allowed to conduct their particular style of business under the current planning requirements.
When looking to buy commercial property you need to ensure that the income is secure. This involves checking the strength of the tenant, the security provided by the tenant, thoroughly analysing the details of the lease, and checking the income paid is in line with the requirements of the lease.
When looking to buy commercial property you need to ensure that the building is properly insured. This involves checking that the necessary parties required by the lease have provided adequate certificates of currency and these are up to date.
Prosper Group has developed a thorough due diligence checklist which identifies and reports on up to 119 important aspects that determine the quality of the commercial property and its investment potential. We provide one of these comprehensive reports to our clients when they engage us to buy commercial property for them.
If you are looking to buy commercial property and would like to know more about our comprehensive due diligence report, please contact us on 1300 664 373.
