5 Things to Know Before Buying an Office or Factory



It is a difficult decision to make when considering whether or not to buy an office or a factory. What are some of the essential things to know before buying an office or a factory?



Location is very important, just like residential property. Where you set up your factory or office can make all the difference. Make sure you want to be close to your customers; at the same time close to your suppliers. Besides, you would also want to consider getting a place that has access to rail, highway or shipping lanes. To run the business successful, it has to be accessible to the end user and the suppliers. Also, there are some questions to ask yourself when choosing a location:


  • Are there government plans for new infrastructure?
  • Is there a plan to rezone the area?
  • What are the characteristics of the population? Are they wealthy in terms of socioeconomic status? Who are your target customers?




A thorough budget planning is required for all kinds of investment. Calculate your budget, your business plan and cash flow projections before deciding to buy a factory or an office. Take into your borrowing needs and your business growth from your planned projects. If you opt for a big loan for your office or factory, it will affect your balance sheet which could limit your future borrowing capacity. By knowing your budget, this could help you to narrow down your options for the buildings.



Future plans for leasing or expansion

Although you could get distracted by rental guarantees, take into consideration that in case your business has to slow down or has to face a closure, the building would still have the chance for leasing and there will be sufficient takers for that. Simon Lambert, Managing Director of McGees Property advises that the thing that drives capital value over time is the demand and supply equation for a property type and location. He says, it is important to find the long term value which is one’s most important goal, even though one should understand how the leases and terms secure your income.




Physical condition of the property

It is important for you to know what the purpose was and how the property was used for before you decide to purchase an office or a factory. Then, it would give you a gauge on how to maintain the property and how you are going to renovate it. You would also know what kind of repairs are needed in the future. Not only that, as what Lambert has mentioned, this would also help you to know about the resale value for the future or the rental cost that you could charge your future tenants.




Litigation on property

Knowing whether or not the factory or the office that you are purchasing has any old or existing litigation is important. You get to re-negotiate on the litigation if you find that they are not feasible. If not, you have the chance to turn down the deal. Consider hiring a lawyer to make the process easier and complete the entire transaction.