There are many factors to consider when buying or renting a commercial property. However, because evaluating potential investments can be difficult, savvy investors run the risk of making mistakes that can lead to disaster. Read this article to prevent fatal mistakes when buying commercial real estate in Pakistan.
The basic commercial real estate type in Pakistan consist of warehouses, land, offices, and shops. If you’re still involved in a dispute between residential and commercial investments, be sure to take a look at the most vital aspects of commercial investment before discussing the checklist before buying commercial property.
THINGS TO DO BEFORE PURCHASING OR INVESTING IN A COMMERCIAL PROPERTY
Here’s a quick rundown of what to look for when buying commercial real estate.
Gathering Property’s Information
The first thing on a commercial property checklist is gathering basic information about the property you’re interested in. Including collecting information about the size of this development region, the amount of flooring, the kinds of property available, the entire amount of commercial properties, size of a parking lot, the existence of civic facilities, zoning, and, above all, the no-objection certification issued by the qualified development authority.
As soon as you have gathered the data mentioned above, it is time to reassess the data offered from the seller or real estate agent, in addition to general information for additional verification. For example, you can contact the Lahore Development Authority (LDA) to test the standing of commercial property in Lahore. Get in touch with the Karachi Development Authority (KDA) or Sindh Construction Control Authority (SBCA), .and buyers in Islamabad can get into the Capital Development Authority (CDA).
Note: It’s crucial to check all the information independently and not rely on a seller’s words.
Directing Inspections
Inspecting the premises, structures, and facilities of a property you are about to buy is the second element on the commercial property purchase list
Since commercial investment is normally more costly than purchasing a home or flat, it’s a good idea to employ accredited specialists or inspectors to assess each element of its construction separately. This includes assessing the state of the base, ceiling, doors, windows, walls, electrical system, gas connection, water distribution, fire security system, waste disposal program, phone lines, central AC system, emergency exits, underground storage tanks, safety systems, and other amenities. It’s also wise to employ an expert to search for termites, mould, or any other infestation type.
Whether you are a budding investor or have significant work experience, be sure to hire experts who are well versed in local building codes and regulations. If the property is located on a housing association’s territory, when inspecting the building, its bylaws must be observed.
Note: Here’s a DIY list for buyers to inspect the home that you might find useful.
Evaluating Information of Tenants
Buying an occupied building by various companies and businesses has its pros and cons.
The positive side is that you don’t have to advertise or search for new tenants, and you may renew your present contracts. On the other hand, however, you might need to make modifications or even cancel some of the contracts to guarantee a stable rental income. Thus, the third thing on the list for purchasing commercial property is collecting information about current tenants.
Before you register under any dotted line, collect as many facts regarding the renters as possible. You have to know about what type of companies are working from your prospective business investment. Utility obligations, security deposit, info related to monthly rent also have to be verified.
To check the tenant’s financial stability is also important to ensure that they do not meet their default payments and meet their deadline. Further, reviewing these companies’ business models can give you a good idea of their paying rentability.
Moreover, since a commercial lease is many years, individuals should also check for each renter’s special privileges and lawsuits if you come across a company with a history of financial or legal problems, as these tenants could negatively impact the reputation of your building. It can also negatively affect the rental yield.
Studying Agreements and Statements
Before purchasing a commercial zone building, you have to assess architectural drawings, construction permits, zoning records, approved programs, financial announcements, building code violations, and environmental assessments. It’s also wise to ask for information about any previous and current litigation problems. Next, you have to examine and receive specific service contracts. Aside from their affirmation, it’s also wise to check whether they may be cancelled without consequence.
Reviewing Documents
The last element to test before purchasing commercial real estate is receiving and verifying records. Now, here are a few of the main files you want to verify before moving forward with your commercial investment.
- Approved Plan of the Property
- Completion certificate
- Sale Deed
- Property Tax Receipts
- Power of Attorney
- Mother Deed
- Encumbrance Certificate
- Bank Approval Certificate
Whether you’re purchasing or renting commercial property, always take additional attention to make certain you don’t lose out on any specifics, however insignificant that may seem. Moreover, hiring specialists for construction inspection might be somewhat pricey. Still, you have to remember that spending a couple of thousands on due diligence is a much greater investment than losing a few hundred later down the street.
