Don’t Make These 3 Mistakes When Buying Commercial Real Estate | Summary and Q&A

TL;DR

Avoid these mistakes when purchasing commercial real estate: not consulting an attorney before signing the contract, insufficient inspections, overlooking zoning issues, and not understanding the lender's requirements.

Key Insights

• 🤘 Calling an attorney before signing the contract for commercial real estate is crucial to avoid legal pitfalls.
• ❓ Comprehensive inspections, including consulting tenants, can provide valuable insight into the condition of the property.
• ❓ Conducting thorough due diligence on zoning regulations ensures the property can be used as intended.
• ❓ Familiarizing oneself with the lender's underwriting requirements prevents last-minute complications during the loan approval process.
• 😒 It is essential to be aware of restrictions on the property to ensure they align with the intended use.
• 🍧 Having a knowledgeable real estate agent and attorney is invaluable in navigating the complexities of commercial real estate transactions.
• 🥺 Overlooking these mistakes can lead to financial and legal consequences.

Transcript

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Questions & Answers

Q: Why is it important to consult an attorney before signing a contract for commercial real estate?

Consulting an attorney is essential because contracts may be drafted by out-of-state attorneys who may not be familiar with the local law or custom, leading to potential misunderstandings or discrepancies that can be rectified beforehand.

Q: Why are inspections crucial when purchasing commercial real estate?

Inspections are vital to identify any necessary repairs or maintenance. In the case of properties occupied by tenants, consulting the tenants themselves can provide valuable information on the condition of the property.

Q: What role do zoning issues play in buying commercial real estate?

Zoning issues are part of the due diligence process and ensure that the intended use of the property aligns with the regulations set by the County or town. Failure to address zoning issues can result in legal complications or limitations on the property's use.

Q: How important is it to understand the lender's requirements when buying commercial real estate?

Understanding the lender's requirements is crucial to avoid surprises or last-minute complications. This includes understanding assessments like phase one environmental assessments and guarantees for the loan, preventing potential hurdles during the financing process.

Summary & Key Takeaways

• Many buyers make the mistake of not consulting an attorney before signing the contract for commercial real estate, which can lead to issues with local law and custom.

• Insufficient inspections, especially when dealing with properties occupied by tenants, can result in overlooking necessary repairs.

• Zoning issues are often overlooked during due diligence, potentially causing problems with the intended use of the property.