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Thinking of Buying Property? Here is a Checklist of Items to Consider « CGC Commercial
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Thinking of Buying Property? Here is a Checklist of Items to Consider

by Chris Garcia, 2:11 PM on July 13th, 2011, No Comments

Thinking of taking advantage of the weak real estate market and depressed prices?  Here are some things to think about as you go through the purchase process:

  • Expand your search criteria. Too many companies pick their ideal location and miss some of the best deals around.  Expand your criteria to know everything that is out there.
  • Know who your sellers are and what their debt is on the property. Is it an investor that needs out?  Or is a business that is currently in the building and could lease back? Know who they are and why they are selling.  Also, know their debt situation.  This should be public record, and will tell you what they need to get for a price.
  • Find out if there are any environmental issues on or around the property.  A Phase 1 will help you understand the history of the site.  They usually cost less than $5K.
  • Give yourself at least 12 months for the search process. You need enough time to see the entire market.  Also, it is not uncommon to walk away from a negotiation or even get outbid.  We currently have 2 clients that have been outbid on buildings in the last 6 months.
  • Meet with your banker first. Get a budget and know what you can afford, no sense in looking at property that is out of the price range.
  • Talk to multiple banks.  Different banks offer different deals, talk to a few different groups.
  • Connect with the city to see if any incentives are available. Some cities are more aggressive on attracting business than others, lob in a call to the city where you are looking to see if anything is available.
  • Find out if non-recourse debt is an option.  Non-recourse debt protects your assets should you default on the loan.  Bank debt is normally recourse however life insurance companies offer non-recourse.  Know the difference between the two.
  • Know what it would cost to build the ideal property. It should not cost anything to have your contractor provide a soft bid as to what it would cost to build the ideal property.
  • Have patience but act quick once a deal is agreed to. If you’re getting a good deal, chances are the Agents know that and will try to bring in other offers.  Once the deal is agreed to, have the seller take it off the market!

There are many factors that impact your purchase price.  Knowing the entire situation could save you time and money but also help you avoid a compromising situation.  Get prepared and know all your options!

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