Whether owning a little café has always been your dream or a fresh opportunity has fallen at your doorstep, you’re now on the hunt for business premise. And whilst many business owners make the decision to lease premises, buying freehold could still be the right option for you.
When you buy commercial property, you get complete control of the layout, without specific restrictions on how you can use it. You’ll also have the reassurance that the property won’t be pulled from underneath you if the landlord decides they want to go in another direction.
Purchasing commercial property is a much greater financial commitment, however, so it’s essential you make sure the premises are right for you. Read on to find out what you should look for:
Focus on Location
The location of your business premises is the most important element if you’re going to be customer facing, but less relevant if you aren’t going to have clients coming to visit your office.
Does the area have parking? Will there be much foot traffic? Is there an easy-to-access public transport option nearby? These are all questions you need to be asking yourself.
You’ll want your premises to match your business’s brand but have a look at how it already appears. Does it look like it gets a good amount of natural light? Is the exterior in good condition?
For example, if your office is dark and cramped, visiting clients aren’t likely to think much of it. Think from the perspective of a potential client – does the appearance of this building really sell your business?
One advantage you’ll see from buying commercial property over leasing it is that, with any luck, its value should appreciate over time, making it a profitable asset that you can sell down the line.
To work out whether it’s a strong investment or not, take a look at the surrounding area, as well as its history. Do businesses tend to do well here? Is there a stable or even growing population? What’s the local employment market like? Commercial property investment is considered a greater risk that residential, because if commercial opportunities change, a property can stand vacant for months, if not years.
Purchase Loan Considerations
One final point you should consider is that getting finance for a commercial property purchase may well be different from a residential one. This is largely down to the heightened risk surrounding commercial properties and it often results in lenders requesting a higher loan-to-value (LTV). Where you might be able to acquire 90-95% LTV for a residential property, you could well struggle to get higher than 70% for a commercial space.
As always, before moving forward, seek professional advice from your financial advisor. They’ll be able to help you work out your financial situation, as well as help you find the best loan option for your situation.
The information and links provided on this website are for general information only and should not be taken as constituting professional advice. This information does not take into account the financial situation or particular needs of individual readers. Before making any decisions about matters discussed on this website, you should consider whether it is suitable for you in light of your own circumstances, and seek appropriate advice.