Rangewell

How to Buy a Commercial Property

By Rose Brown
Content writer
Published: 3 November 2021 1 minute read
Rangewell

The key things you need to know

If you’re thinking about buying a space to grow your business, Rangewell has created this guide on things to consider when purchasing commercial property. Read on to find out more about commercial property investing.

Table of Contents

Buying a commercial property can be an excellent option for people who run a small or medium-sized business. At one point, other types of property investment, such as the buy-to-let sector, would have been the go-to option, but this option is looking less attractive than it did a few years ago. Now, there are so many more options available on the commercial property market. 

Things may have changed, but it’s important to remember that the residential sector is not without risk. Here are 10 things to consider if you’re thinking about buying a commercial property and the commercial property types available. 

Looking for funding for your commercial property venture?

We cover whole-of-market so you get the right deal

Call us
Schedule
Email

Choosing your location

You’ll need to think hard about the location of your commercial premises, similarly to how you would when buying your one home. Some things you should ask yourself are:

  • How often will you be holding regular face-to-face meetings with your client on the premises? 
  • Will you employ a high number of staff who’ll be working from the space?

If both of the points above are relevant, then it’s probably best for a town centre of a city centre location as this will be more desirable for both clients and staff for transport links. 

On the other hand, if you’re dealing with clients on a remote basis, and out of town location may be a more cost-effective solution. 

Rangewell can help property managers expand their business. Get in touch today to talk to one of our real estate brokers. 

Take advantage of low-interest rates

It’s important to remember that interest rates might not stay as good as they are now, but at the moment, they are still competitive enough to make a commercial mortgage an attractive option. In addition, you could consider re-mortgaging your property to raise capital which may be cheaper than a business loan. And if you do decide to invest, there is another significant benefit: you’ll be able to deduct the tax from interest payments on commercial mortgages. 

If you're thinking about expanding your industrial property business, Rangewell can provide you with the best advice around. 

Think with your head and not your heart

The short-term cost of buying a commercial property, especially with a mortgage, could exceed the cost of renting the same property. With a start-up, that would introduce some added uncertainty. You should only invest in a commercial premises if your business is well-established with solid growth potential. You might prefer to rent in the short term, then think about investing in a commercial property later on. 

If you're a new real estate investor, we can help you get started on your journey!

Get in touch today to see how we can help

Call us
Schedule
Email

Flexibility is key

Look for a property that has flexibility. Your business will expand and change over time, so look for premises that can be adapted to your business as it grows. Also, think about your rental incomes - this can significantly help improve your cash flow if you have a steady stream coming in. 

Deposit

With a residential property, you’ll likely need to put down a large deposit. Lenders might ask for a deposit amount of 20% of the value of the property or purchase price. So, be sure to factor this into your calculations. Lenders might also ask to see a longer-term business plan, so make sure you prepare this before speaking to your mortgage lender. 

Have a survey done

You should choose to have a complete professional survey carried out before you proceed with the purchase of any type of business. Sometimes, the more basic surveys that your mortgage lender will require just won’t cut it. A survey will be a wise precaution whether you’re investing in a commercial premises or a private home. 

Sub-letting your premises

You should think about a sub-letting part of the premises if you have to option to do so. This can be a great way to manage any potential cash flow problems and keep that full flexibility. You’ll need to make sure that the mortgage lender agrees to sub-letting part of your premises. You’ll need to read any clauses that could potentially restrict any sub-letting carefully. 

If you'd like to find out more about subletting street shops through to shopping centres, Rengewell can tell you what you need to know about buy-to-let property and buy-to-let property investment. 

Budget 

You’ll need to make sure that you have a proportion of cash for ongoing maintenance of your property, and you’ll be responsible for the long term upkeep and any ongoing cost of property - just like you would when buying a private home. You’ll need to budget ahead to prevent any unexpected surprises later down the line. 

To find out more about commercial property funds available, speak to Rangewell today. We can tell you everything there is to know about commercial property investment.

Parking

It’s essential to consider the parking requirements of your staff and guests when buying your business property. If city centre parking is expensive, it might make more sense to lean towards an out-of-town location. A large staff carpet will often be a significant advantage for people travelling to work by car. 

To find out your options when it comes to commercial property investment funds, speak to Rangewell today. We've helped many commercial properties get started on their journey. 

Do your research 

You’ll need to consider the price predictions. Look at the long term predictions for your area. Look to see if there are any planned infrastructure changes that may impact future property prices. A fall in the value of your commercial property might affect your business capital, so don’t overextend yourself. Time spent on research is essential!

Thinking about real estate investing?

Speak to Rangewell today

Call us
Schedule
Email

The bottom line

Buying a commercial property is more-risk free than purchasing a private home. But if you do your research correctly, you’ll avoid the common mistakes. By doing your due diligence, you’ll be more well placed to make a sound investment, and you’ll ensure your business is on a secure long-term footing. 

If you’re thinking about buying a property, speak to Rangewell today - we can help you every step of the way, 

You may be interested in...

Your step by step guide to starting and financing a glamping business

Your step by step guide to starting and financing a glamping business

Finance a glamping business from the initial land purchase through to welcoming your first guests takes time, expert sup...

16 September 2022
How to Start a Funeral Home Business

How to Start a Funeral Home Business

The UK funeral market is overshadowed by corporate groups, but still represents promising revenue thanks to continually-...

4 August 2022
How to Refinance a Commercial Property Mortgage

How to Refinance a Commercial Property Mortgage

Commercial mortgages are a popular form of finance for business owners looking to buy premises. Like a homeowner’s mortg...

10 May 2022
What Are the Different Finance Types of Property Development?

What Are the Different Finance Types of Property Development?

In the search for property finance options, potential developers must navigate a minefield of options, lenders and packa...

7 February 2022
Refinancing a Bridging Loan to Help Property Developer Slash RepaymentsCase Study

Refinancing a Bridging Loan to Help Property Developer Slash Repayments

Short-term bridging loans are a common sight in the world of property development – especially when the developer favour...

3 October 2022
Landlord Consolidates Debt for Easy Repayments on Mixed Property PortfolioCase Study

Landlord Consolidates Debt for Easy Repayments on Mixed Property Portfolio

Property portfolios are a sound investment but are usually built over several years as new properties are acquired or de...

3 October 2022
Finding the Optimal £3.5M Office Renovation Finance for SolicitorCase Study

Finding the Optimal £3.5M Office Renovation Finance for Solicitor

One of the UK’s leading solicitor firms had experienced rapid success in recent years, expanding to a team of over...

28 June 2022
Securing £150,000 Buy-to-Let Mortgage for Commecial InvestorsCase Study

Securing £150,000 Buy-to-Let Mortgage for Commecial Investors

£150,000 BTL finance   Buy to Let investors have faced challenges in recent years with the loss of...

18 October 2021

Our service is:

Impartial

Transparent and independent, treating all lenders equally, finding the best deals.

In-depth

Every type of finance for every type of business from the entire market - over 300 lenders.

Personal

Specialist Finance Experts support you every step of the way.

Free

We make no charge of any kind when we help you find the loan you need.