How to Buy a Commercial Property in Toronto

Buying a commercial property in Toronto can present a viable long-term business opportunity for investors with the means to manage a commercial property while leasing it out to another party, or for companies that plan to save money by using a commercial property for their own business operations. If you plan to buy a commercial property in Toronto, you'll need to make an accurate analysis of the risks and benefits, as well as your projected return on investment for both the short and the long terms. Furthermore, you'll need the assistance of a reputable commercial realtor who possesses a sound understanding of the commercial real estate market in Toronto. The following steps will tell you how to buy commercial property in Toronto.

Steps

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    Determine whether the purpose of buying a commercial property in Toronto is to lease it out or to use for your own business operations.
    • A commercial property to lease out to other businesses will need to meet the demands of those businesses. You can rent out office space, retail space, or warehouse space. Each has its own requirements in terms of location, accessibility, and layout.
    • A commercial property to use for your own business operations will have to meet the demands of your own company. For example, if you own a storage business, you'll need a warehouse type property that is accessible to both cars and trucks and offers the potential to create secure individual units, as well as providing enough office space for your administrative operations.
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    Assemble a team of experts to assist you with analyzing the risks and benefits of buying a commercial property in Toronto.
    • Your team should consist of at least an accountant, lawyer, financial manager or mortgage broker, and a commercial realtor with proven experience in the Toronto area.
    • Use the Toronto Real Estate Board and the Canadian Real Estate Association as resources to find a dependable realtor, as well as for background and legal information on buying commercial real estate in Toronto.
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    Analyze the financial ramifications of buying a commercial property in Toronto.
    • Draw up a report on currently available funds, as well as investment and income projections pertaining to buying a commercial property in Toronto. Determine what are acceptable returns on investment for using the property yourself or using it as a source of income, as well as what the desired re-sell value is. Also investigate how property devaluation will affect your taxes, as well as how owning real estate will enhance your company's equity.
    • Analyze the risks of buying commercial real estate in Toronto, such as loss of liquidity for your business, failure to meet your projected return on investment due to tenants defaulting on their payments, devaluation of a property's location, or loss of resell value due to a real estate slump.
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    Choose a commercial property in Toronto. Your realtor will be key in selecting a property with a good location that's zoned for commercial use. In addition, the physical condition of the property and price are important aspects to consider.
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    Research the property and location. Find out whether there's a lien on the property due to a previous owner's payment defaults, and whether there are plans to change the immediate neighborhood in terms of infrastructure and other commercial, residential, or industrial developments.
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    Obtain the investment to purchase the property. This can be with your own company's funds, with a bank loan, with funds from investors, or a combination of all three.
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    Purchase the property. Carefully review the sales agreement with your lawyer before signing it.

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Categories: Buying Property