The commercial property landscape in California offers a dynamic opportunity for investment and business growth. With the help of a qualified attorney, you’ll understand the complexities of commercial property investment and navigate the real estate purchase process smoothly.
Statista.com reports that the United States commercial real estate market is expected to increase at a compounded annual growth rate of 2.22% between 2025 and 2029. These properties include industrial buildings, offices, and warehouses.
In this article, we discuss details about the commercial real estate purchase process in California. We also delve into the closing procedures, contract negotiations, and due diligence.
What Stages Are Involved in the Real Estate Transaction Process?
Purchasing a commercial property in California can be profitable only when conducted the right way. There are various steps involved in the transaction process. Below is a commercial real estate buying guide:
Identify a Property
When identifying a commercial real estate, you need to consider its history and whether it can generate a steady income. Additionally, the location of the property should be conducive to the type of investment you’re planning to make.
Note down any repairs or work that needs to be done on the property to prepare it for its intended purpose.
Property Evaluation and Due Diligence
Conducting thorough inspections is vital to ensure there are no hidden issues and the building is in perfect condition. High-quality attorneys from the Law Office of Lisa Wills, a PLC, will assist you with inspection reports and check out the condition of the property on your behalf.
Some of the areas to inspect include HVAC systems, electrical systems, the structure of the building, and plumbing. Besides, it’s recommended to review all documents that are related to the property. These may include:
- Environmental reports
- Zoning certificates
- Title deed
- Lease agreements
Come Up With the Initial Offer Price
When buying commercial property, ensure your initial price offer isn’t too much. Evaluate the potential income of the investment by analyzing its projected and current rental income.
Also, consider the possibility of rent increases and the vacancy rates of the area. This action will assist you in determining the return on investment (ROI) of the property.
Make the Purchase
The next real estate transaction step is the purchase and sale agreement. It contains the terms of sale, including all things agreed upon by the buyer and seller. Negotiating the purchase amount is part of the buying process to ensure you settle on the best possible price for the property.
A real estate lawyer from the Law Office of Lisa Wills, a PLC, will help you with the negotiation price by considering factors like comparable sales in the region and market conditions. The attorney will also draft, analyze, and review the purchase and sale agreement. These measures ensure it meets your needs and there are no hidden statements that may eventually affect the property.
Financing
If you require financing to purchase the commercial property investment, do your due diligence to find the best lenders with the most favorable terms. Financing options for commercial properties in California are mainly in the form of:
- Small Business Administration (SBA) loans
- Permanent loans
- Bridge loans
- Hard money loans are rare instances
Close on the Commercial Real Estate Property
Once you’ve agreed upon the terms of purchase and have obtained the necessary financing, you can move forward with purchasing the property. Follow the real estate transaction steps below:
- Final walk-through of the property to ensure
- Everyone is in its expected condition
- Pay all fees and closing costs
- Transfer of ownership and signing all relevant documents
What Are the Different Types of Commercial Properties in California?
Commercial real estate refers to property meant for business purposes. Below are the common categories of commercial properties:
- Office buildings: These are multi-tenant and single-tenant buildings
- Industrial properties: Meant for storage, production, and manufacturing
- Retail spaces: Standalone retail stores, strip malls, and shopping centers
- Mixed-use properties: A combination of industrial, commercial, and residential spaces in a single property
- Multi-family residential spaces: Contain several residential units and are sources of rental income
Frequently Asked Questions
What Are the Common Types of Commercial Real Estate Sales in California?
A traditional sale is the most popular sale transaction for commercial real estate properties in California. This kind of sale takes place when a seller and a purchaser come together to agree on the terms of sale and close the deal. These kinds of transactions usually take approximately 30 to 45 days to close.
Other common transaction types in real estate include the following:
- Foreclosure sale: Occurs when the commercial property is foreclosed and is under the ownership of a bank
- Trust sale: The property is under a will or trust due to the death of the owner
- Bankruptcy sale: The seller is declared bankrupt, and the property is under a court-appointed trustee
Every transaction type has its own purchase process that can affect the manner in which the deal is closed.
Is the Seller Required to Disclose Previous Inspection of the Property?
Property sellers in California are expected to fill out the Transfer Disclosure Statement (TDS). This document contains a detailed list of any issues that the commercial property may have. Additionally, sellers should be honest about any past repairs, reports, or defects.
The California law also requires sellers to disclose whether the property is located in a flood hazard area.
How Is the Commercial Real Estate Market Faring in California?
The real estate market in California reflects a promising landscape. It is the Firm’s understanding that there may be demand for logistics and warehouse spaces is increasing due to the strategic trade hubs in California. Moreover, retail spaces are changing with a focus on high-end retail, experiential shopping, and grocery-anchored centers.
Navigate Through the Real Estate Purchase Process Easily With Law Office of Lisa Wills
Purchasing a commercial property in California can be a complex but profitable process when done correctly. During the real estate purchase process, you should work with a professional attorney to guide you through the purchase and ensure the transaction goes smoothly.
The real estate attorneys at Law Office of Lisa Wills, a PLC, are well aware of the paperwork involved in purchasing a commercial property in California. We’ll help you save money by giving you reliable legal tips for real estate and protecting your interests during the buying process.
Contact us today to minimize complications and purchase a profitable investment.
