Whatever your reason for buying an office building, it is important to realize that the process is not the same as buying a house. Whether you want to run your company out of the building or simply plump up your property investment portfolio, you need to be aware of some things in order to make sure that your purchase is sound and will be beneficial for you over time. Here are some things to keep in mind during the process.
Get a Mortgage Loan Before Making the Seller an Offer
You might have good credit and own other properties, so you may assume that you'll be approved for any mortgage loan you want. However, you might not know that other factors may affect whether a lender will approve a commercial mortgage loan.
For example, before approving a loan, a bank might want to have an environmental study done if the zoning for the office building has recently changed. If the building was previously in an industrial zone before the change, the bank may want to make sure that there is no contaminated groundwater on the site. If there is, they may refuse to extend a loan to you for the property, and you won't be able to buy the building.
To make things easier for yourself, make sure you have a mortgage loan in hand before you make an offer to buy the office building. That way, you can address and resolve any lender concerns before talking to sellers.
Talk to Tenants
If the office building already has tenants, you may want to see the leases in place before you make a formal offer on the building. However, it's a good idea to go a step further and meet any tenants, if possible.
Meeting tenants can help you learn more about whether they plan to renew their lease and give you insight into their relationship with the current owner. As a result, you will have a better idea of whether you'll have to fill all the lease space when you buy the property. You'll also have some idea of whether there are existing tenant problems that you will need to resolve.
Now that you know some things to focus on when looking for office buildings to buy, use the information above to help you make smart decisions along the way. For more guidance, consult an experienced real estate agent who can help you buy commercial real estate that is suited to your needs.