A Guide to Buying Commercial Property in Alabama
Investing in a commercial property in Alabama begins by educating yourself. You need to take your time.
Commercial real estate should be a long-term investment, so a first time investor should do their due diligence in order to avoid the risks.
It can take a year or more to find the right property for you, which is plenty of time to expand your knowledge.
What Type of Commercial Property Do You Want to Invest in?
The first step in your search should be establishing what commercial property in Alabama you are looking for.
In commercial real estate, there are four main categories: industrial, office, multi-family, and retail. There is also the option to purchase land for future development.
Take a look at your finances. Determine a range for your investment, how many parties are contributing and whether you will be seeking any kind of financing options.
Establish a scope for your investment. Decide how much time you are willing to dedicate to managing your investment and if you will be utilizing the space. Perhaps you hope to move your offices to the building, in which case it’s important to determine how much space that will require.
Align Yourself With A Commercial Real Estate Professional
Your money is on the line, so it’s important to hire a professional commercial real estate broker to guide you through the entire process.
Not only is it essential to have a professional on your side negotiating the deals, brokers have an established network within the business. They often have the lead on what is available before it is publicly known to be on the market.
Beyond the search, a broker will do the heavy lifting and administration – any financing, paperwork, permits, assessments and so on. Many firms also offer additional services to help pair you with property management or pair you with a reputable management firm.
Do Your Market Research.
The demographics of an Alabama community will be the basis for establishing the area’s commercial property investment potential. Projected growth is also a great way to estimate the future increase in a property’s value.
We recently broke down our list of some of our top areas in the state for commercial real estate. When you take a look at population growth, job market and the general quality of life offerings in a community, you often get a good estimate of where it’s headed.
If you are set on a community in Alabama that is well established, like Birmingham or Huntsville, expect to invest at a premium. You may be putting more money in and seeing a more stable return.
Communities that are less established may seem riskier; but often the data will paint a picture of the future.
Areas like Baldwin County and Lee County are emerging markets that are attracting more residents as well as major corporations that have boosted the local economy and job market.
Determine What Type of Alabama Property is Right for You
As you explore available properties and become more knowledgeable, what you are looking for in an investment property may evolve.
Continue to determine what is important to you in your investment. Here are some key factors you may want to focus on:
Location. You can change the way a property looks and functions, but you can’t pick up a lot and move it to a better spot. If you are purchasing an industrial property, this may mean focusing on how much space you have for materials and equipment. For an office space, perhaps it’s more important to identify the residential aspects of the neighborhood – school systems, healthcare amenities, grocery stores, etc.
Zoning. Make sure you do your due diligence when assessing the bureaucratic elements of your investment. Is the property zoned for the type of business you hope to develop? If you are doing renovations, what permits will you need?
Utilities. When determining your overall investment, you will factor in the cost of utilities – water, gas, electricity, internet, sewage, etc. If you are developing a piece of land, know which lines are available and identify the municipalities and companies you will be working with.
Renovations and Improvements. Take a look at the work that needs to be done at purchase as well as what is on the horizon. If the roof only has a few good years left, you’re looking at a major expense down the line that will affect your overall ROI if you don’t factor it into the negotiations.
History. You wouldn’t buy a used car without seeing the history report. In addition to title insurance, it’s important to take at history of ownership in order to avoid unforeseen claims.
Ready to Invest in Alabama?
If you’re ready to start the Alabama commercial property search, Ironvest is ready to help you every step of the way. Reach out to our brokerage team for more information.