Posted on: 30 November 2021Share
The search for the right commercial property for an investment should include evaluating the property's physical characteristics and condition, in addition to looking at potential cash flow and rental expenses. As you search for your next commercial rental property, be sure you check all important aspects as you complete your due diligence. Here are some recommendations for a property appraisal to help you in your selection process to purchase the right commercial rental property.
Hire a Commercial Property Appraisal
No matter the type of commercial property you are purchasing, a property appraisal is going to be essential. First of all, any lender who is providing you the financing for the purchase will want to make sure the property's value is up to what the property is selling at. This ensures the lender that they can resell the property if you were to default on the loan, and it makes them aware of the property's value based on its cash flow potential and equity growth based on the area and market.
Additionally, if you are paying cash for a commercial property and you are not involving a lender, you will still want to make sure the property is worth what it is selling for and what you are planning to pay for it. You don't want to pay too much for a property because if you decide to sell it later, you will find out that you likely cannot sell it for what you paid.
Look For a Licensed Appraiser
When you hire a commercial property appraisal, make sure the appraiser is licensed to complete the assignment. They should have a Certified General Appraisal License that you can check through their business and also your local business license office.
Make sure they are licensed to work in your particular state and that their license is up to date. By doing so, you are ensuring they know what they are doing in the appraisal and will be able to provide you with a correct evaluation in the property appraisal.
Evaluate the Property's Condition
When your appraiser is ready to begin the professional commercial appraisal on a target property you are considering purchasing, they will check the property inside and out. They will take photos and compare it to similar commercial properties in the area. They will also evaluate the property based on its condition and look at its potential as a rental property based on current market rents. Your appraiser will also write up a final report on their findings, along with any potential problems they find in the property and its use.
Reach out to a local commercial real estate appraisal service to learn more.