Getting started on the property market ladder isn’t an easy feat, and no one is pretending it is. The truth is you’re going to have many questions that you need answers to as a matter of urgency.
Now, if you’re thinking of purchasing business property, then you very well might have some experience under your belt, or you may have little or no knowledge in this field whatsoever. Whichever position you’re in, you can benefit from learning more about how to go about financing a business property, and if it is your first, then this guide is essential. Continue on for handy advice, pearls of wisdom, and recommendations to help you make sense of financing commercial property.
First things first
Right off the bat, you’re going to have to decide exactly what you need and expect from the premises you’re considering. So, think about the square footage of the place, as well as layout, the location, structural requirements, and facilities. With these particulars in mind, also then think about your long-term plans for the place, and whether you might want to expand, renovate, and alter according to your requirements.
Going forward from here, thoroughly check off business property specifications to be crystal clear about what you should be looking for, and to find the most suitable business premises for you.
Investing in business property
Investing in property usually provides a steady stream of income as you’ll receive rental payments from tenants each month. Now, very seriously consider just how far your money will stretch, and what you can get for it. Bear in mind when looking to invest in a property that will garner renter’s interest, factors such as infrastructure, socio-economic factors, location, and readily available workforce.
Commercial properties usually have longer leases than residential ones, which means, thankfully, that you’re likely to have an income for longer. Always consider the long-term as well as the
short-term when investing in business property, and be sure to search the register of planning decisions before going ahead and deciding where to buy.
Lease or purchase?
Once you’ve found a property you’re interested in, it’s wise to seek the expert advice of a commercial property lawyer who will explain to you the more intricate side of proceedings that include clauses, technicalities, and the terms of the lease. If you’re thinking of purchasing the property, then you want to know how best to finance it.
Understanding commercial property finance can be a bit of struggle since there are so many variants, but first, ask yourself the following questions and evaluate your answers from here:
1. How much finance am I going to need?
2. What kind of mortgage do I require?
3. How quickly do I need finance?
4. What is my typical monthly turnover?
You’ll be pleased to hear that commercial mortgages are readily available to a range of different businesses, and lenders will usually find up to 75% of the purchase costs with terms up to 30 years. If you’re already quite sure about the property you’d like to secure and, hopefully, begin cashing in on then apply online for a commercial property loan.
What is bridging finance?
Since this is likely your first business property, then you will have heard the term ‘bridging finance’ thrown around here and there, but what exactly is it? Bridging finance is a short-term solution that enables a quick way to finance buying a property and bridges the gap between the money you have and the money you need to buy. The clue is in the name!
If you’re thinking of kickstarting your maiden voyage into business property, then you will need to know about the funding side of things, and how you’re going to afford to buy. Your choice of property will largely depend upon your budget and how high you can afford to go. With this in mind, make sure you’ve thought about all the added extras will invariably bump up costs, and
could see the budget have to increase seriously. So, if this is your first business property buy, remember to factor in the following elements:
● Building and contents insurance
● Initial purchase costs, such as the professional fees due to the hire of surveyors and solicitors
● The cost of any alterations required to ensure that health and safety, and fire regulations are met
● Maintenance and repairs
● Ongoing rent, utility charges including the likes of gas, electricity, and water
● Business rates
Be sure to make as exact calculations as you can, as this will then save you stress, disappointment, and considerable financial strain further down the line.