Buildings for Sale

What to Look for When Looking at Buildings for Sale

Having been in business since 1932, we’ve seen and heard of every reason someone might be looking at buildings for sale. As such, we wanted to provide a quick guide on what to look for, what to be leery of, and who to go to if you need any help. Think this might be you? Keep reading to learn more.

Looking at any sort of commercial real estate can seem like a daunting task, but it doesn’t have to be. Just follow these four easy steps, and you can’t go wrong:

  1. Identify why you’re looking at buildings in the first place.
  2. Temper your expectations.
  3. Keep an eye out for red flags.
  4. And be ready to seize a golden opportunity.

 

Why Start Looking at Commercial Real Estate?

Entering the realm of commercial real estate offers a plethora of opportunities and advantages. Whether it’s establishing or expanding a business or developing new opportunities, owning a commercial building provides stability, control, and long-term savings.

Moreover, it offers the chance to craft a unique brand identity and capitalize on development opportunities. In this dynamic landscape, the possibilities are endless for those ready to embark on this exciting journey of looking at buildings for sale:

  1. Starting or expanding a business.
  2. An investment opportunity.
  3. The tax benefits.
  4. Control over property.
  5. Stability and security.
  6. Branding and image.
  7. Long-term cost savings.

The Possibilities and Reasons Broken Down

Starting or Expanding a Business:

One of the most common reasons is to start a new business or expand an existing one. Purchasing a commercial building provides a permanent location for operations and can offer greater control over costs compared to leasing.

Investment Opportunity:

Commercial real estate can be a lucrative investment opportunity. Investors may purchase commercial buildings to lease them out to businesses, generating rental income, and potentially benefiting from property appreciation over time.

Tax Benefits:

Owning commercial real estate can provide various tax advantages, including deductions for mortgage interest, property taxes, depreciation, and operating expenses. These tax benefits can help reduce the overall tax liability for the property owner.

Control over Property:

Unlike leasing, owning a commercial building gives the owner full control over the property. This control allows for greater flexibility in customizing the space to suit specific business needs and long-term planning.

Stability and Security:

Believe it or not, simply looking at buildings for sale is the first step toward added stability and security. For businesses, owning their own building can provide stability and security, knowing that they have a permanent location for their operations. It can also protect against rent increases and lease terminations that may occur with leased properties.

Branding and Image:

Owning a well-designed and maintained commercial building can enhance a business’s branding and image. It allows businesses to create a customized space that reflects their brand identity and values, potentially attracting more customers and clients.

Long-Term Cost Savings:

While purchasing a commercial building may require a significant upfront investment, it can result in long-term cost savings compared to leasing. Over time, the equity built up in the property and the absence of rent payments can make ownership financially advantageous.

 

Some things to look out for

So, you’ve started looking at buildings and other pieces of commercial real estate, and maybe you’ve narrowed the selection to a few strong considerations. What now?

Selecting the ideal commercial building involves weighing several crucial factors. From location and size to zoning regulations and market dynamics. Each of these details can play a pivotal role in determining the property’s suitability for your business. However, here are the details you should focus on the most:

  1. Location.
  2. Size and layout.
  3. Condition and Maintenance.
  4. Zoning and regulations.
  5. Utilities and infrastructure.
  6. Parking and accessibility.
  7. Market and demographics.

Breaking Down the Pivotal Details of Looking at Buildings for Sale

Location:

The location of the building is critical for its success. Consider factors such as visibility, accessibility, proximity to amenities, target market, and local regulations.

Size and Layout:

Evaluate whether the building’s size and layout meet your current and future needs. Consider factors such as floor space, number of rooms/offices, storage space, and flexibility for future expansion or modifications.

Condition and Maintenance:

Assess the overall condition of the building, including its structural integrity, age, and any necessary repairs or renovations. Factor in ongoing maintenance costs and whether any major repairs or upgrades will be required soon.

Zoning and Regulations:

Verify that the property is appropriately zoned for your intended use and familiarize yourself with local zoning regulations, building codes, and other legal requirements that may impact your ability to operate the business.

Utilities and Infrastructure:

Ensure that the building has access to essential utilities such as water, electricity, heating/cooling, internet, and phone services. Consider the reliability and capacity of these utilities to support your business operations.

Parking and Accessibility:

Evaluate the availability and adequacy of parking facilities for customers, employees, and deliveries. Consider accessibility for people with disabilities and compliance with accessibility standards.

Market and Demographics:

Research the local market and demographics to assess the demand for your products or services in the area. Consider factors such as population growth, income levels, competition, and economic trends.

 

Some Red Flags to Watch for When Looking at Commercial Buildings for Sale

In the pursuit of commercial real estate, vigilance is paramount to avoid potential pitfalls. From visible signs of neglect and environmental hazards to legal entanglements and financial instability, recognizing these warning signs is essential.

By being proactive in identifying these big issues you can safeguard your investments and make informed decisions in the competitive commercial real estate market:

  1. Overall poor condition.
  2. Environmental concerns.
  3. Legal and zoning issues.
  4. Deferred maintenance.
  5. Financial instability.
  6. Low occupancy or high vacancy rates.
  7. Structural Issues.

Learning to Identify These Red Flags

Poor Condition:

Visible signs of neglect, such as structural damage, water stains, mold, or pest infestations, may indicate significant maintenance issues that could be costly to address.

Environmental Concerns: 

Be cautious of buildings that may have environmental hazards, such as asbestos, lead-based paint, or contamination from previous industrial activities. These issues can pose health risks and lead to expensive remediation efforts.

Legal and Zoning Issues: 

Investigate any legal or zoning issues that could impact the property’s use or value, such as zoning violations, easements, encroachments, or disputes over property boundaries. You might think this is something that should be done before you start looking at buildings for sale, and you’re right. However, it’s also something you should do throughout the process.

Deferred Maintenance: 

A history of deferred maintenance or incomplete repairs may signal ongoing maintenance problems and could indicate that the building has not been adequately cared for.

Financial Instability: 

Assess the financial stability of the property, including any outstanding liens, unpaid taxes, or pending litigation that could affect the sale or ownership of the building.

Low Occupancy or High Vacancy Rates: 

A high vacancy rate or difficulty in attracting tenants may indicate underlying issues with the property, such as poor location, ineffective management, or competition from neighboring properties.

Structural Issues: 

Be wary of buildings with significant structural issues, such as foundation cracks, sagging roofs, or uneven floors, as these can be costly and challenging to repair.

 

And finally, how do You Know When You’ve Found the One?

So, you know why you’re looking at commercial buildings for sale. You’ve been on the lookout and avoided all the potential red flags. Very good. But now what?

Discovering the ideal commercial building investment involves recognizing key signs of promise as well. From its prime location and well-maintained condition to stable tenancy and positive cash flow, certain indicators signal a strong investment opportunity. Consider factors like these to make sure your purchase aligns with your investment goals:

  1. Strong Location.
  2. Well-maintained property.
  3. Stable tenancy.
  4. Positive cash flow.
  5. Upward market trends.
  6. Flexible use and zoning.
  7. Strong infrastructure and utilities.

Understanding How to Recognize a Golden Opportunity

Strong Location: 

A prime location with high visibility, good accessibility, proximity to amenities, and favorable demographics can indicate a promising investment opportunity. Buildings located in thriving commercial districts or growing neighborhoods may have a higher potential for success.

Well-Maintained Property: 

A well-maintained building, both inside and out, suggests that the current owner has taken care of the property and invested in its upkeep. Look for signs of regular maintenance, such as clean common areas, updated landscaping, and modern facilities.

Stable Tenancy: 

A building with stable, long-term tenants and low vacancy rates can provide a steady stream of rental income and reduce the risk of income volatility. Evaluate the quality of tenants, lease terms, and tenant retention rates to gauge the property’s stability.

Positive Cash Flow: 

Analyze the property’s financial performance to ensure that it generates positive cash flow after accounting for expenses such as mortgage payments, property taxes, insurance, maintenance, and vacancy allowances. Positive cash flow indicates that the property is a sound investment that can generate returns for the owner.

Upward Market Trends:

Research local market trends and economic indicators to assess the property’s potential for appreciation and long-term growth. Positive indicators such as population growth, job creation, infrastructure development, and rising property values can bode well for the property’s future value.

Flexible Use and Zoning: 

A building with flexible zoning and multiple potential uses can appeal to a broader range of tenants and investors. Look for properties with versatile layouts and zoning designations that allow for various commercial, retail, office, or mixed-use purposes.

Strong Infrastructure and Utilities: 

Ensure that the building has reliable access to essential utilities such as water, electricity, heating/cooling, internet, and phone services. Well-maintained infrastructure and modern utility systems can enhance the property’s appeal and functionality.

 

How can You Make Looking at Buildings for Sale Easier?

After all, we’re sure you already have a lot on your plate. So, why add more?

In the quest for the perfect commercial property, the search for buildings for sale can be arduous and time-consuming. Despite the allure of ownership, navigating complexities such as property condition, financial stability, and legal considerations requires expertise. Partnering with a knowledgeable commercial real estate (CRE) professional can streamline the process, offering insights and guidance to secure an investment aligned with your goals. With their expertise, you can navigate the market efficiently, ensuring a strategic investment that paves the way for long-term success.

The Blau & Berg company was founded on the tradition of personal service. That’s it. Just people serving people. If you don’t know where to start, or you’ve already started but don’t know where to go now, give us a call. Our goal isn’t another commission. Our goal is another relationship.

Let us help you.