Buying a commercial real estate is a complex proposition, where sometimes become challenging even for experts to maximize their investment value. Henceforth, comprehending below concerns can help to make an efficacious acquisition.
Understand the matrix
When deciding to buy a commercial real estate, it is important to do some homework, to understand the potential risks and to become a player in commercial real estate. As the commercial property valued differently, the income on commercial real estate is calculated on usable per square foot area but in a residential home that’s not the case. Through commercial property a big cash flow can be seen as you get added income on residential unit, than on a single home.
However, while evaluating commercial real estate, you should get used to with the commercial key conditions and metrics such as – what is the net operating income of that property, what is the current cap or capitalization rate, which estimates the net current value of the property.
Right Selection
Location is the crucial part. The type of commercial asset which could be office buildings, warehouse, restaurants or shops etc., should be strategically located. For instance, a parking area might be essential for retail shops, whereas a wholesaler might want a large stocking dock. So what you are looking for in commercial space will depend on your business profile. Pay particular attention to zoning law and restrictions that govern the sites. Moreover, ponder growth prospective in the long run, and determine if you will be able to lease out space if the company doesn’t grow as projected.
Due Diligence
During the buying process, it’s essential to review the agreement fine prints and perform an extensive study on the developer and the development. Buying the property from the renowned developers might make the purchase process smoother. Make sure to look at, if there are no issues with the property that could imperil your business anon. Examine wisely and find if any impending pitfalls such as constructural defects, or dated installing. You should also make sure no insurance dues or lawsuit affect the property.
Finance
Commercial mortgage guidelines are slightly different as compare to residential mortgage. And today affordability is a big issue in commercial real estate, so before you approach a bank, you should work with an accountant to determine your budget. In commercial funding, the bank requires a deposit of about 30 to 40 percent of the sale price and the loan terms is up to 15 years only in the UAE. To qualify for the commercial funding the bank reviews buyer’s business profile and company audit report, director’s income documents and bank account statement. In general bank review the past performance, the current viability and long-term future plans of the business which determines the purchaser repayments competence. Commercial mortgage loan-to-value generally falls into the range of 60 to 70 percent. And the current commercial mortgage rates in Dubai start from 4.99 percent. It is always favorable to shop around for the best mortgage package.
Expert Advice
Buying commercial real estate is often a complex process and having an expert beside, will certainly help with most of the steps. Appointing a commercial real estate broker, a lawyer, an accountant and a mortgage broker will sway your acquiring process. These professionals can support to value properties and will assure contracts are upright before signing. And indeed can help you to identify a bank which can finance once you select the property.
Let our certified consultant help you to plan your investment in Dubai. 4C Mortgage Consultants provide best mortgage consultancy for a resale property, new purchase property, off plan purchase, construction mortgage, project finance, commercial mortgage, buyout, equity release, Non-UAE Resident mortgage in Dubai. Follow us on Twitter, Facebook, and LinkedIn and keep yourself updated with more home buying tips.