Buying commercial property can be very rewarding if it's done properly. Utilising the expertise of a buyer's agent will reduce any risks and ensure that the process is as stress-free and rewarding as possible.
If you are buying for investment or to operate your business from, it's important to note that buying commercial property is a completely different ball game to buying a residential property.
The risks are higher, and you have to know what to look for. As most buyers don't have the time to become experts in the commercial market, a buyer's agent can help you navigate your way through successfully.
Here are the different types of commercial property and how a buyer's agent can assist.
Preparation
A buyer's agent can help you assess your goals for the property and work with your finance broker and accountant to have you ready to buy. This may mean registering for GST, forming an entity to hold the property or helping assess your budget.
Investment strategy
Commercial property investment can be very rewarding. Tenants usually pay your outgoings, which means your cash flow can be better than with residential property. It doesn't come without risk though, and you need a buffer for potentially longer
vacancies than with residential property.
Your buyer's agent should be able to help you weigh up your goals and your risk vs return requirements. You can aim for a long, secure lease with a strong tenant and accept a lower rental return. Or you may choose to take more risk and aim for a
higher return. Your buyer's agent will also obtain a copy of the lease and review it to ensure it is in order.
Owner-occupiers
If you're looking for premises from which to run your business, a buyer's agent's due diligence can help ensure you'll be allowed to operate your business at the property. Local governments have different allowable uses in the
various geographic pockets in their suburbs and unprepared buyers could end up with a property they are not allowed to operate their business from.
Strata
If it is a strata commercial property, your buyer's agent should help you navigate through all the strata documents so you know exactly what you are buying and understand the limitations and extra costs involved.
Research
Your buyer's agent will research on and off-market properties and review them against your budget and goals. They will assess the location, the lease if it's an investment, the future potential, how it matches your goals as well as practical
things like floor space, parking and quality. It can sometimes take longer to find a commercial property than a residential one, so your buyer's agent may be working with you for some time.
Due diligence
There is far more to check out on a commercial property and each one is different, so your buyer's agent will adapt the due diligence investigation to suit you and your needs. They will liaise with several government authorities to check the property
and give it the tick of approval - or fail it and move on, saving you from an expensive mistake.
Offer contract
Your buyer's agent will often draw up the offer paperwork for you, including making sure the terms and conditions are in your favour as much as possible. For larger purchases, sometimes your solicitor might be involved as well.
Price
Establishing the price can involve comparing rental yields, estimating costs per square metre or comparing with recent similar sales, and sometimes a combination of these. It is not a simple process and an experienced buyer's agent can pull together
the data to establish what the property is worth.
Negotiation
Your buyer's agent will use the price estimate they have established and weigh it up within the competitive landscape to help recommend what to offer. They will also negotiate the purchase on your behalf, using their experience and skills, to achieve
the best possible outcome for you, and help see it through to settlement.
More information
To find out more about buying commercial property, refer to this list of REIWA's Buyer's Agent Network Committee members.
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