Buying Commercial Real Estate

Tips for Buying Commercial Property in the Minneapolis Metro Area

1. Define Your Needs & Goals:

• • What type of property are you looking for? (Office, retail, industrial, multifamily, etc.)
  • What size and location are ideal? Consider proximity to amenities, transportation, and target market.
  • What is your budget? Include purchase price, renovation costs, operating expenses, and financing.
  • What is your long-term investment strategy? (Hold, rent, develop, etc.)
  • What is a realistic timeframe?  Both in locating the right property and successfully closing

2. Research & Due Diligence:

• • Market research: Analyze local demographics, availability and competition.
  • Property research: Obtain property reports, surveys, environmental studies, and legal documentation.
  • Financial analysis: Review financial statements, rental income, and expense history.
  • Legal & Tax considerations: Consult with legal and tax professionals for advice on ownership structure, regulations, and potential liabilities.
  • Are there off-market opportunities?  A well connected and experienced local broker can help guide you

3. Secure Financing:

• • Shop around for loans: Compare interest rates, terms, and lender fees from banks, credit unions, and private lenders.
  • Consider alternative financing options: (SBA loans, Conventional, Owner-financing)
  • Negotiate loan terms: Secure the best possible interest rates, amortization periods, and prepayment penalties
  • Are they’re tax deferment levers we can pull? 1031 Exchange?

4. Work with a Real Estate Professional:

• • Find a reputable commercial real estate broker: Look for someone with expertise in the Minneapolis market and your specific property type.
  • Utilize a commercial real estate attorney: Ensure your interests are protected during negotiations and closing.
  • Hire a property inspector: Thoroughly evaluate the condition of the property and identify potential issues.

5. Negotiation and Closing:

• • Negotiate the purchase price and terms: Be prepared to walk away if the deal isn’t favorable.
  • Secure necessary approvals: Obtain zoning permits, building permits, and any other required approvals.
  • Close the deal: Work with your attorney to review and sign all necessary documents.

6. Post-Closing Considerations:

• • Obtain insurance: Secure property and liability insurance coverage.
  • Manage the property: Hire property managers to handle day-to-day operations, maintenance, and tenant relations.
  • Monitor performance: Track income, expenses, and tenant occupancy to ensure profitability.
  • Meet your tenants:  Put a Face to a Name and start the relationship with their new Landlord off right

Specific Tips for Minneapolis Metro Area:

• • Consider the submarkets: Minneapolis has distinct submarkets with varying property values, availabilities and market conditions.
  • Embrace the evolving urban landscape: Minneapolis is experiencing revitalization efforts and a growing tech sector.  Many Large companies choose the Minneapolis area as their headquarters and/or warehousing hubs for their operations
  • Pay attention to parking availability: Parking can be a significant concern, especially in urban areas.
  • Be aware of the impact of weather: Consider the potential for harsh winter conditions and their implications on property maintenance, tenant satisfaction and employee commutes.

Remember: Buying commercial property is a complex process. Thorough research, due diligence, and professional guidance are essential for making a successful investment.