Five Due Diligence Mistakes That Can Ruin Your Commercial Real Estate Investment

by Richa Malhotra Real State

It's really a drawn-out and complicated process to find a perfectly suited commercial office space for your business, and if it's not pursued in a proper way, it can cost you lots of money and might end up in a conflicting place. So, when it comes to buying an office space or any other commercial space for your business, it's very important for you to have a strategy and ensure that you are making a good decision based on the needs of your company. Below mentioned are a few most common due diligences mistakes that the investors should be careful about.

1.      Incorrect Property Valuation: One most common mistake made by investors while purchasing a commercial space is that they don't valuate the property correctly. This might lead to lots of misunderstandings which would finally end up with a wrong deal. So, just make sure that you really are conservative when it comes to underwriting a deal. Check for sales competitors and other properties available in the market by getting in touch with the most active commercial agents.

 

2.      Not Understanding Lender's Underwriting Requirements: Before spending your valuable time, money and energy conducting due diligence, make sure that you have a prior discussion with the lenders about the loan amount they would put on your property. Because, these days the money lenders have been very conformist and they have long lists of things to be considered like the physical condition, sale and lease comparable intended use, environmental issues and so on. So, it is important to check with the lenders prior to going ahead with the process.

 

3.      Not checking if the Property Complies: These days, it's not at all uncommon that a buyer gets to know that the property doesn't meet the compliance of building after purchasing it. The buyers usually get to know about it when the city inspector comes to check if there's any infarction associated with the property. So, it's always a good idea to have an architect, planner or the contractor to inspect the property and discuss the issues related to compliances during the due diligence period.

 

4.      Assuming There Are No issues: Usually the buyers or tenants who are in a hurry to get into a property make this mistake. They just want to get settled in a space which makes them assume that there are no issues. But sometimes the leases can have tripwires like contraction provisions, cancellation provision, fixed option rents, etc. As a tenant you must be aware of these provisions as it can put you in a bind making you devalue the property. So, if you are not familiar with the process of buying or leasing commercial office space in Noida, it's good to have an attorney who can help you in reading the lease.

 

5.      Not Spending Time at the Property: When you are about to buy a property or leasing it, it's not just enough if you take a bland look at it as it's something that impacts your business heavily. Make sure you visit the property multiple times and that too at different times in a day; this gives you a better idea of what goes on there at the property. Sometimes it may also change your mind and the decision of buying the property. You won't just know what's going to be hidden; may be the moulds or the fire issues in some units to name a few. Spend enough time at the property and make sure that it's ideal for you.

Many commercial real estate investors are not aware of the things that they are unaware of! The above mentioned points surely give a brief idea and they'll also get to know the things they need to follow while looking out for a commercial space to set up their business.

Bottom Line

Being more conscious towards investing in a property might be initially more costly; however, it is ultimately rewarding to make such investments. Projects like Anthurium Sector 73 Noida find that spaces are sold and leases are more readily signed; investors save money by cutting expenses on due diligence; however, this can be the biggest mistake of their life.

So, if you want to invest in a safe and approved property, book your commercial office space with Anthurium Noida TODAY!!

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Created on Mar 27th 2020 07:46. Viewed 343 times.

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