Considerations for Buying Commercial Real Estate Long Distance
If you’re simply investing in commercial real estate in the Myrtle Beach area or plan to relocate here with your business, there are some considerations you should keep in mind when you are buying commercial real estate long distance. The top reasons people have for investing in commercial real estate here from out of town include affordability, more options for a deal, growing their portfolio, getting greater profits per investment dollar or they are relocating here and bringing their business with them. No matter your reason, here are the considerations for buying commercial real estate in Myrtle Beach from out of town.
Consider the local market – Affordability is a key reason people choose the Grand Strand for commercial real estate investments. Greater affordability leads to greater return on investment (ROI), increased cashflow and often, faster growth of the investor’s portfolio. It’s important to understand that the local market has variations for commercial real estate, just like it does for residential. Just because a property is affordable doesn’t mean it’s in a neighborhood that is best for your investment. While South Carolina is more affordable than say, California, New York or Colorado, you still have to dig into the details and truly understand the local market here before investing.
Consider the need to visit the property – It’s never a good idea to buy real estate sight unseen. Even if you are simply investing in a property and don’t plan to relocate here, it is essential to make the trip to come visit the property before you sign on the dotted line. Lots of deals look like a great bargain until you actually visit the location physically. Even as an investor, you’ll want to visit your property periodically once you own it as well to look after your investment properly. You’ll also want to be present for the inspection.
Consider whether you will need property management services – If you are investing in a property that you don’t plan to occupy with your business, will you require the services of a local property management company? If so, is the real estate a big enough purchase to warrant the costs of property management services? The commercial property you’re buying should be large enough to generate enough cash flow to cover the property management services while still providing a profit. If the property isn’t large enough, you could end up losing money in the long run. If you do need a property management company, be sure to review several reputable companies used to working with out of town owners.
Consider the area population – When you buy a commercial property, you’ll need people–renters, customers, employees for the businesses and so on. You want to make sure you choose an area to invest in that has a growing population and not a shrinking one. You’ll also want to make sure the existing population is robust enough to meet the needs of your business or the businesses who will occupy your property.
Consider your due diligence – What homework will you need to do on the property financially, legally and physically to do your due diligence? It’s important to understand the history of the property and any issues faced by previous investors/owners so you understand where they miscalculated and you don’t make the same mistakes in your handling and management of your investment. Part of your due diligence is also developing relationships with local contractors for the various services you might need for your property. This can be difficult to do long distance so is best tackled when you are in town to visit the property.
There are a number of considerations when buying commercial real estate, especially when you’re making the purchase from out of town. It’s important to understand exactly what you are investing in, the area surrounding it and how the local market can contribute to or take away from the success of your investment.