| Commercial Real Estate Projects are, in many | | | | significant additional costs associated with changing the |
| respects, the same as residential real estate | | | | use of the property to meet the new regulations. Due |
| investments except for their size. A commercial | | | | diligence is the key here. Hire a real estate attorney to |
| develpoment may well be many times larger in scale | | | | check on the property to find out if there is a likelihood |
| and thus require much more money. In this article we | | | | of re-zoning and other legal issues. Use the attorney to |
| examine three of the most significant non-financial | | | | check that, for example, all necessary accesses are |
| issues that an investor should consider before investing | | | | available and that rights of way have been established |
| in a commercial real estate deal. | | | | and any development will not cause rights of way |
| 1) Selection of tenants | | | | conflicts. |
| Given that most real estate investors are buying | | | | 3) Check Utilities |
| property to generate cash flow and generate profit | | | | A thorough inspection of all utilities and their condition is |
| from asset appreciation some time looking at the | | | | mandatory. Reinstalling electrical systems and piping |
| tenant mix of a commercial building can determine the | | | | can be very costly and any defect should be factored |
| potential profitability of a project. | | | | into the offer price. In the worst cases, where pipes |
| Seeking creditworthy tenants may well assist in gaining | | | | and wires are emebedded in walls, ceilings and |
| finance on good terms from potential lenders - many | | | | underfloors the cost of renovation may make a |
| lenders will make an offer that is based upon the | | | | project non-viable without complete demolition. |
| credit rating of the larget tenant. So, finding a project | | | | So, spend some time with an appropriate legal advisor, |
| with creditworthy tenants - or, at least, the expectation | | | | check and optimise the tenant mix and ensure that |
| of finding them is a priority. Analysis of the tenant mix | | | | utilities are in serviceable condition. Although these |
| with a view to optimising it is an important part of the | | | | factors may not be an immediate part of the financial |
| buying process. | | | | considerations they should be as shortcomings in due |
| 2) Property Zoning | | | | diligence can prove expensive and, of course, issues |
| Success in real estate investment has much to do | | | | uncovered should be reflected in the purchase price of |
| with land zoning. If zoning should change during | | | | the property. |
| redevelopment of a property then there will be | | | | |