The outlook for commercial real estate transactions is filled with cautious optimism. That means the market looks favorable, and economic growth is continuing to rise. So, if you are considering investing in the CRE world and acquiring some new properties for your portfolio, here are three ways you can do your due diligence to limit any surprises you may find post-transaction.
Zoning
Current rules and codes applying to zoning can change with the whims of a few meetings and the pressure of influential individuals, or the opposite could be true, you could find yourself waiting for years for permits or business licenses to be secure. For Steven Taylor landlord, who specializes in multi-unit distressed property purchases, zoning is especially important in his property valuation, use of property allowance, and tax certificates.
Compliance
Public and private multi-use existing structures must be ADA compliant. The Federal Government and each state within the United States have its own set of regulations about modifications to buildings and necessary accessibility for disabled persons. For investors, this is especially important because any building that is not currently at code must be brought. There is a checklist supplied by the federal government that lists the requirements.
Searches
Property descriptions and title searches are important documents in any escrow proceeding. Past and current ownership, property liens, easements, and encumbrances are all necessary information for the clearing and ownership of any title. Make sure you have a qualified inspector evaluate the property, and if possible, ask for a very detailed report. Request a survey of the property boundary lines, actual lot dimensions, listed access roads, and code allowances. The rights-of-way attached to the land are important factors, as are the water and soil conditions of the property surrounding the building. Verification of the validity of any title associated property is essential during this phase of due diligence.
Defects in your due diligence before purchasing CRE can be the difference in a successful transaction or the potential loss of money. You can make sure there are no problems when you do a comprehensive and extensive due diligence.
Article Submitted By Community Writer
