If you feel your business has outgrown its current space, and want freedom from having a landlord, buying instead of renting corporate real estate could be a great idea. It could also be a good idea if you found a great property in a prime location. Others may want to diversify their portfolio and become landlords themselves.
However, before you jump in and make an acquisition, it is very important that you understand a few things about buying corporate real estate and make sure that it’s the right choice for you. Here are a few things you’ll have to consider when you invest in corporate real estate.
Budgeting for the Property
Budget for the property before you start talking to estate agents. You aren’t just budgeting for the purchase or mortgage on the building; you’ll need to pay the stamp land duty tax as well. You may have to pay environmental compliance costs too.
You’ll also need to budget for the long-term maintenance and upkeep of the property like waste management fees. You’ll probably want to buy furniture for the building, or you may need to renovate the property or make repairs. Give yourself an extra margin by having money in the bank so you can pay for unexpected expenses.
Note that you will also need a large deposit to put down on the building. It is common for commercial mortgage lenders to ask for a deposit of 20 percent. A few may even ask for a copy of your business plan.
Make Sure that You Work with the Right Team
If you want to build a corporate real estate portfolio, it’s very important that you work with the right management team. A good team will be well rounded and will help you with things like financing, surveying, inspection, and asset management among others. They’ll also be able to spot good opportunities for you. Having the right team in your corner will make sure that all your paperwork is in order and formalities are handled, allowing you to concentrate on your main operation.
Plan the Layout Properly
At the end of the day, you want the workspace to be as efficient as possible. You can’t leave this part to chance. Different office layouts may be better for different teams.
If you want to build a more agile work floor, then you might want to look into things such as hot desking and have an optimal combination of shared workspaces and enclosed areas. We strongly suggest you work with an operational efficiency expert that will be able to look at different floor plan types with you and make proper suggestions depending on your operation and what type of workspace you want to build.
Buying corporate real estate can be a great way to increase profitability while adding assets to your company’s portfolio. However, it can quickly become a liability if you make the wrong decision, or if it’s not properly managed. So, make sure that you do your research, and make sure that you surround yourself with the right team before you make any decision.