Wait! Read This Before You Buy an Office Building
Every few years, I get curious about what it would be like to have my own office building.
I’m picturing a place to host retreats, live events, a studio recording space, plus room for team members. I’ve researched locations, prices, renting vs owning, and all the other exciting details. Some of my clients have purchased their own office spaces as their businesses grow and expand.
The pandemic put my office space dreams on hold for now, but perhaps you’ve thought about having a space all your own?
Your office space has a direct impact on the success of your business, so finding the right building should always be a priority. As your business grows and your needs change, you might find that it’s time to relocate.
Renting an office is one option (and most new businesses will go down this route), but if you have more capital to play with, then you might decide that you want to buy a commercial building instead. Owning a property gives your business more assets, and you also have more control over the office, so you don’t need to worry about increasing rent in the future.
However, buying a commercial building is a big risk, and you’re putting a lot of money into it, so you need to be sure that you’re making the right decision.
Before finalizing the sale of your new office building, remember to do your due diligence to ensure that the space is right for you and there are no underlying issues.
Give Yourself 30 Days
Give yourself 30 days before finalizing the sale so you can get all the information you need. Speak to the seller and make an agreement with them, then ask them to provide all relevant documents about the maintenance history, title documents, and insurance policies.
You can use the 30-day period to carefully review all of this information and carry out other assessments.
Assess the Physical Condition of the Building
You want to make sure the building is solid and not falling apart, so carry out an appraisal before you do anything else.
If you work with appraisal management companies, then they can organize everything for you and find the right appraiser for the building. During the appraisal, any structural problems, issues with the heating systems, and roof damage will be discovered. These are big issues that are expensive to fix, so you don’t want to take on an office building in this condition.
Simple cosmetic issues aren’t much of a problem, but anything beyond that is a serious cause for concern.
Check the Building’s History
Even if everything seems above board on the surface, there could be hidden problems that appear after you have finalized the sale.
If that happens, there isn’t much you can do, and you’re stuck in a difficult position. Issues that come up repeatedly are likely to continue to be a problem in the future, which is why you need to check the building’s history. This will give you more insight into the state of the building and help you avoid any disasters.
Check Energy Efficiency
Energy efficiency is important when you’re buying an office building, and your running costs are one of the biggest expenses you have to cover. Heating and powering an office building is not cheap.
If you move into an old office with poor insulation and a boiler that’s decades old, then you’ll end up with massive energy bills every month. Ask the seller to show you some previous utility bills so you can get an idea of how much it is likely to cost. Look elsewhere if they’re too high.
Alternatively, you could make some upgrades to the building to make it more efficient, but that’s going to be expensive, so think carefully about whether you’re willing to take it on.
Consider Surrounding Infrastructure
Learning more about the building itself is important, but you also need to consider the surrounding infrastructure and what your responsibilities are.
For example, what are the access roads to the building like and will it be easy for employees to get to the office? Do you need to do any repairs to those access roads? What state are the mains access water pipes in? Are you likely to have expensive problems with the plumbing in the future?
Look at exactly where the boundaries of the buildings fall because you may be responsible for the upkeep of certain areas that overlap with public spaces. Make sure you understand those responsibilities and are willing to take them on.
Buying a commercial building for your business is a great move, but only if you find the right building. Take the time to ask questions and do your assessments before signing any paperwork to avoid any problems in the future.
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