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3 pitfalls to consider before investing in commercial real estate

On Behalf of | Jan 9, 2024 | Real Estate

Commercial real estate requires a considerable investment but can bring significant returns. However, several things could derail your plans and deplete rather than increase your investment’s value.

Here are some of the major issues you need to recognize and avoid:

1. An inability to use the property for the intended purpose

You must understand the zoning laws in effect for any piece of land you wish to buy. Not just the current ones, but any changes in the offing. These limit the ways in which you can use a piece of property.

2. Disputes over ownership

Not everyone who sells real estate is honest. There are plenty of chancers who will sell a property that is not theirs to sell if they think they can get away with it. Even if someone has a genuine claim to the property, others may also have a claim to it. Inheritance disputes can lead to situations where more than one person believes they have the right of ownership.

Minor discrepancies, such as boundary disputes or a neighbor’s claim to have the right of access over the property can also cause problems if not resolved before purchase.

3. The plans of others

Eminent domain law gives the government the right to make the compulsory purchase of real estate in certain circumstances. Not only could this cost you the time you have put into a project, but you might not recover the total amount of money you invested, as their valuation may be less than yours.

Even if they do not want your land, the purchase and development of nearby land could harm your project. For example, a golf course you build will become less attractive if the sound of birds is replaced by the roar of trucks on a newly constructed highway.

With legal and help to conduct thorough research, you can determine whether to proceed with a purchase or walk away.