3 Tips on Neighborhood Research Prior to Purchase
Everyone knows that location is by far the most important variable when purchasing commercial real estate. It determines what the tenants will expect and what the neighborhood can support. Here are three basic tips for researching a neighborhood before making your commercial property purchase.
The three major areas of research should be governmental, economic, and social. This means that the buyer should learn everything they can about the tax structure and zoning laws in the neighborhood where they contemplate investing. The tax structure will have an enormous long-term effect on the profitability of the purchase, whereas the zoning laws will be important in getting the business off the ground and finding the right enterprise to occupy it. It is not a bad idea to seek out someone experienced with business and commercial property in the area, as they can highlight the most important details, inform about enforcement practices, and reveal a bit about the character of the neighborhood.
The underlying economic structure of the neighborhood is also important. Sales records for every property in the area will be available online, and they are organized and arranged in a way that is easy to access. It is trivial to research what other buildings the neighborhood sold for, what they were used for, how successful their tenants were, and other important information. For example, frequent Insurance payouts because of flooding should certainly be noted when considering a commercial property investment.
Finally, there is simply no substitute for thorough familiarity with the neighborhood in question. Obviously, the prospective investor must visit their property, and they must do so often. The more time they spend in the neighborhood, the better they will know it. Deep and fundamental truths about their neighbors will be revealed it to them, allowing them to make more insightful and informed business decisions then could even be contemplated by someone without real familiarity with the neighborhood.
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