Have you always wanted to buy some real estate whether it is a home or building for your business? Its part of the “American Dream” to own your home and not rent anymore and its also part of the small business success to own your own business location. But many times the excitement and flair get in the way of reality and we are not only surprised by arising issues but many times not even ready to make that move. Below I will talk about some things to be prepared for at any level and with any purchase of a property.
Closing Costs– When buying a house or building there are costs associated with actually sitting down and settling the sale. The title company charges money, the lender takes money and sometimes you must pay contractors. All of this adds up and there are lots of times that the buyers are shocked and have to scramble to come up with the right amount of money. Go into a purchase prepared cash wise including having reserves for potential repairs after closing. Ask lots of questions and be weary if you are not being told real numbers.
Timeline– This is the most important space you and your family or you and your employees will own together and taking the needed time is critical to not make a mistake. Buying a property can take a lot of time and finding the perfect property can take months and months. Depending on your needs and wants, this timeline will require you to have patience and trust the process. Don’t over promise yourself and have expectations that are not attainable as with nearly all real estate sales, the end date is a floating number and can require several extensions at times.
Hire an expert not a licensed person– I know a lot of people that have jobs that you just cant figure out how they got them and keep them, real estate is no different. In a nutshell, anyone can become a Realtor and sell you property but their skillset can be crucial throughout the process. I am all for learning on the job but this is one of those times you should ask a couple of questions to qualify them and be sure you are not the competent one in the deal. Ask them to share a specific example of the type of property you want to buy and how they were involved in the transaction. It’s easy to prove. Ask them for a list of contractors and vendors they use before getting started. Good ones have this list handy and have a “guy” for nearly every little project. Lastly, ask for contracts. Long running brokers with lots of experience have lots of contracts. If they are loose with these and don’t seem to mind running blind, its a red flag that they have not done a lot of transactions in the past and have not run into many of the pitfalls that come along with a buy.
Get that Money– Nobody really believes the money is the hard part many times until they are knee deep in paperwork and emails from a bank. If buying a commercial property don’t even bother looking until you have gone over the different loan types with your bank. Know the ones you plan to use. If you are buying a house having a true pre-qualification letter is key. Send the bank your tax returns and monthly expenses along with your income. Be honest and let them guide you on a budget and timeline. You would be surprised at how many people “have a loan in place” but in reality can’t buy for some time.
Buying property can be a blast and the smartest financial move you can make to create wealth. But taking the time to be smart and make the right decisions is key to a smooth transaction.