Reno Nevada – March 27, 2018 – Due diligence is a vital component when purchasing or leasing an industrial real estate property, according to an industrial real estate specialist.
Matthew Harris is a Senior Associate with Avison Young, Western Alliance Commercial, Inc, a full service real estate brokerage company in Reno, Nevada. He has been selling and leasing commercial real estate properties, providing advice and overseeing transactions in the real estate industry for more than a decade. For seven years he has turned his focus towards industrial real estate. He and his industrial team monitor the trends in the market as well as advise clients on how to avoid the common mistakes when investing or occupying industrial properties.
°Many people buy or occupy industrial real estate blindly; says, Mr. Harris, Just because an industrial building is in a good location, it does not automatically qualify as a good deal. You must dig deeper and get more information about the property in question.
”Start by determining your goal and the potential exit strategy for the investment. Use this vision as the reference point to determine the type and condition of industrial property that’s required.” adds Mr. Harris.
Due to lack of quality inventory, the industrial market has become highly competitive. This has caused many companies and individuals to fail to locate the right deal, mostly due to not having enough information about the properties that they intend to purchase or occupy.
Mr. Harris believes issues like higher pricing on given industrial properties, lower-quality buildings, and other structural problems can be avoided if the buyers take more time to inspect the buildings. However, he laments that some are in too much of a hurry to close the deal or sign a lease before any other parties show interest. Unfortunately, rushing in without proper due diligence could result in a half-baked deal and large lose of capital in the process.
Some of the industrial real estate issues that he advises clients to check when considering a purchase or a lease include; the zoning laws, evaluating the value of the necessary repairs, checking if the land has any legal or environmental issues and estimating the potential future costs related to your intended use.
Zoning laws provide a framework for all the allowable uses of the property. They may limit current or future plans that the buyer may have for the land or building. The legal issues surrounding a title to the land may include any liens or encumbrances attached to the title, a court case where the title to the property is being contested, conditions attached to the transfer of the title that may restrict certain uses or required environmental clean up.
°Just like a well-researched thesis, a well researched industrial property will rarely disappoint the buyer or occupant, advises Mr. Harris.
According to Harris, the buyer should engage a reputable building engineer or inspector to evaluate the integrity of the structure independent of the report presented by the seller. In the report, the engineer should explain the extent of damage on structures and fixtures as well as an estimate of the probable cost of repair. Commercial property inspectors and more specialized consultants like; environmental engineers, roofing inspectors, electricians and surveyors should all be secured prior to entering into an escrow agreement, as this cuts the time required for them to inspect and report back to the buyer regarding the buildings overall fitness and potential. This assists the Buyer by allowing them to complete their due diligence review within the time allotted under the purchase contract, thus avoiding any extensions which may not be granted by the Seller and ultimately missing out on the right deal.
Matthew Harris has been involved in hundreds of real estate transactions across Northern Nevada and the United States. He also offers Consultancy Services to people who are considering an investment in the industrial real estate.
Find more here: http://www.avisonyoung.com/en_CA/professionals/-/ayp/view/matt-harris/in/reno