Checklist while buying a commercial property
The first step in purchasing any commercial property in Goa is knowing yourself, what you are looking for and your financial situation. Commercial property investment in Goa is a very good financial decision.
We have listed out few questions which you should be asking in order to start out with:
- What kind of property you are looking for?
- Are you looking to use the building for your own business or planning to rent it?
- What kind of location you are looking for?
- Will you be able to able to pay cash and how much down payment you will be making?
- Are you planning to partner with someone else on the property?
- How much time you would be committing in the property?
Learn the commercial real estate vocabulary
There exist lots of acronyms and vocabulary in commercial estate which you are likely unfamiliar with. It is always helpful to be savvy. It in turn makes the process and the working with various people in the industry easier. In order to get started, you need to know following things:
Loan to value: It is a ration of how much money one is asking from the lender in contrast with total value of what you are planning to purchase.
Debt Service Coverage Ratio: The operations income over the total debt service. It includes how much debt you would be able to cover every year.
The Capitalization Rate: Income of the property that is divided by the total value of the property.
Cash on Cash: The annual income over how much you have actually invested. The invested amount is the same as the amount you have paid as the down payment.
Vacancy Rate: The percentage of various properties those are vacant in time period in the given area.
Do your diligence; try visiting as many properties as possible
See to that you visit as many properties as possible. Figure out what works and what does not work about all of them for you. Also consider the most important things for each one that includes the condition, location and price.
The importance of the location cannot be magnified. The properties those are located near the downtown areas, hospitals, universities, schools or any industrial estates usually have higher value and are sold more quickly.
Most importantly, you are looking for a fit in your property. The situation and the needs are always unique. Property must fit in terms of your price, use and the investment required.
Below are couples of questions you must consider for the property you are looking for:
- For what the property is currently used for?
- For what purposes the property is used for?
- What kind of taxes are there on the property?
- What are the various things you have to repair or replace in the property?
- Why the owner is planning to sell the property?
- How is the surrounding area of the property? Are there any major upcoming changes?
Talk to experts
Buying a commercial property is a daunting task, but you can hire some experts in order to get help to make the process easier. Which expert to consult and how many depends upon the type of the property you are purchasing.
Firstly, you must hire an accountant or a commercial real estate lawyer, the commercial realtor or the mortgage broker. If the property is complicated, you can take help from the other specialists like the environmental specialists, engineers, appraisers, notaries, lawyers, tax experts or the accountants.
Although there are few things you can do on your own via research but it is always better to hire an expert in order to solve your issues.
Hope this article will help you to clear all your doubts regarding investment in Goa for a commercial property.