Real estate investments can be lucrative, particularly if you start picking up commercial properties. A retail building that houses a few stores can be a solid, ongoing source of profit, but you need to check out the few things before buying so that you won't end up losing money or finding yourself in legal trouble.
Building Compliance Issues
Something you need to pay close attention to before you purchase a retail building is whether there are any outstanding compliance issues. For instance, does each store have the appropriate number of exits? Does the building itself conform to the current fire code? Is each store outfitted with a good sprinkler system? Are there more stores in the building than allowed by current zoning laws? The building can seem fantastic and in fact, the current owner might not even be aware that problems exist because the problems predate their own ownership. So how do you know for sure?
The first stop to make is the local zoning department to read the guidelines in place for the zone where the building is located. You should also pay a visit to the permits office and the fire marshal to talk with them about the building and to see records on file. If you don't have that much time or want to be absolutely sure there are no legal problems, a real estate lawyer with experience in commercial properties can help you investigate permits, zoning regulations and other relevant rules.
The retail tenants that are already in the building might seem as if they're doing a lot of business and are happy, but you need to sit down with them to look over their leases and determine how they're really doing. If a retail tenant hasn't paid rent in a few months or hasn't been doing well for some time, they may soon be leaving the building and you'll have to start looking for someone to take over that space. If a retail tenant's lease period is coming to an end, you may have to enter negotiations that entice them to remain in the space once you take over. You might want to raise all the rents in the building and are unsure how that will be received. Going over the existing leases with an attorney and talking with each tenant can give you an understanding of the situation you'll be taking over as the new owner.
Owning a retail building is easier when you're aware of issues like those above before you purchase a property. Retain a professional, such as The Law Office of Vernon Nelson, who understands commercial litigation and who can ensure that your rights are protected and help you resolve problems promptly.Share