A commercial real estate purchase can be a long-term and lucrative investment under a variety of conditions. Whether you are a business owner looking for more control over your physical location, or a real estate investor looking to develop new income streams, commercial properties offer unique possibilities.

This said, commercial property is also very different from an investment from a residential property, and it is important to develop a wide understanding of the commercial real estate market — and ask a few important questions — to set yourself up for long-term success in your investment.

Are You a Business Owner?

Many first-time commercial property purchases are made by business owners who wish to both exercise more control over their physical space and generate another profitable line of income. If you have a retail shop, office space, or another type of business, purchasing the property in which it’s located gives you far wider latitude to utilize the space in the ways you want. No longer will you have to consult with a property owner over renovations or other changes. Similarly, you will have greater power to determine who your neighboring tenants are — and access to potentially lucrative income streams from other tenants.

How Will You Fund the Purchase?

Commercial real estate is often more expensive than residential real estate, and funding strategies are different. If considering an investment, it’s useful to consult with a financial professional and assess the variety of loan options that may be available to you. These include:

• Bridge commercial loans
• Hard money loans
• Construction loans
• SBA loans — particularly 504 loans
• USDA loans

These are not all the options available when purchasing a commercial property, but are worth exploring depending on the details of a particular purchase. 

Are You Ready For Ownership Obligations?

This final question is more conceptual, but essential. As a property owner, the obligation will fall to you to complete needed maintenance, ensure all tenants are happy, seek out new tenants when necessary, and broadly manage the property. This can take time and money and can, in some cases, detract from your primary business. You want to ensure you are prepared to take on this work — and if necessary, look into securing a property manager.

The details above are some of what you may wish to consider when purchasing commercial property. While there are many details to interrogate, the process of purchase and ownership of commercial property can be lucrative and exciting.