Many real estate investors start out with residential properties, but actually have their sights set on commercial property. That’s because commercial property can be very lucrative for investors – although that increased reward usually comes with increased responsibility, especially when it comes to retail property. So, as an investor, you must be aware of what is involved, and you have to make sure you do your due diligence before buying. If you’re interested in this area of real estate investing, here’s what you should know about buying retail property in Cold Spring.
Definition of Retail Property
Of course, before buying retail property in Cold Spring, you need to know exactly what it is and how it differs from other kinds of commercial property.
“Retail and industrial are both considered ‘commercial real estate’ (as opposed to ‘residential real estate’). Commercial real estate refers to buildings or land intended to generate profit; industrial and retail are simply sub-categories of commercial real estate.”
An industrial property is a property used for actually manufacturing goods. It is typically a factory or plant, but can also include warehouses, garages, and distribution centers.
A retail property, on the other hand, is zoned for and used for purely business purposes – that is selling products rather than manufacturing them. Retail property comprises retail stores, shopping centers, malls, and the like. Typically, the business that occupies a retail property leases the space from an investor who owns the property.
The Location Must Be Right
As with any real estate purchase, the first and perhaps most important consideration in buying retail property is the location.
“You want to buy a property that will get a lot of business for your tenants – and in an area you can afford.” In addition, the property has to be in a location that will actually attract tenants.
Here are a couple of important things to consider with respect to location when buying retail property . . .
- “Find out whether there are future developments being planned in the neighborhood. Will an off-plan shopping mall undermine the value of a high street location that you’re looking at?”
- “Make sure there’s a future demand for the property by performing research on the available social amenities, such as schools, hospitals, and shopping centers.”
You Have to Evaluate Several Properties
Buying retail property in Cold Spring or anywhere else means taking the time and putting in the effort to evaluate several properties. You simply must shop and do your research before purchasing.
“Do your homework well to ensure you’re not overpaying for a property you could get elsewhere at an affordable price. Make a list of the properties that fit your search criteria and determine the best one for your needs. Run price comparisons between the properties you’re considering and schedule tours to visit them. You’ll also want to ask questions about the neighborhood, past uses, property taxes, future developments, zoning, repairs, and renovation costs.”
A Cold Spring with experience in retail properties can be a valuable asset at this stage, helping you find a property within your budget and that meets your needs and investing goals. To discover more, just call (914) 407-3322.
You Must Do Your Due Diligence
And, of course, once you have narrowed your search down to a likely property or two, you have to do your due diligence when buying retail property. This is a critical stage in the process.
Basically, due diligence involves “fact-checking and evaluating the condition of the property.” Make sure you carefully evaluate the location and the local real estate market, as well as compare multiple similar properties. And then you should assess the state of the property.
“Due diligence will expose known and unknown issues regarding the title, liens, easements, encumbrances, or restrictions that may affect the property or its development. Possible restrictions may be related to licensing, zoning, environment, or legal compliance.”
Again, it’s a good idea to rely on the expertise of an experienced Cold Spring agent at this stage. You can contact an agent at (914) 407-3322.
You Have to Make an Attractive Offer
Once you’ve settled on a property, you will make an offer. Making an attractive offer is always important when purchasing real estate, but even more so when buying retail property.
“After calculating potential costs and profit, you can make an offer. You can negotiate broad terms using a Letter of Intent (LOI) and more specific terms with a Purchase and Sale Agreement. . . . A back-and-forth may ensue. Meeting in person may help you resolve any problems, but always follow up with written confirmation of any changes or agreements. [H]aving professionals involved from the start minimizes the chances of issues arising.”
You Will Need a Team of Professionals
Most investors, even those with plenty of experience, will need a team of professionals when buying retail property. A team of trusted professionals can help the whole process go smoothly and can help you save both time and money.
Here are the most important professionals you should consider having on your team . . .
- An agent with demonstrable experience with retail property and a track record of successful transactions
- An attorney with relevant experience
- An appraiser you trust
- An insurance broker to help with your insurance needs
Get the Agent You Need
Buying retail property is far from as simple as buying a residential property. Although retail property has the potential for greater reward, it also carries much greater risk. And that’s why it’s so critical to have an experienced Cold Spring agent in your corner. So if you’re considering buying retail property, be sure to contact us at (914) 407-3322.