Top 5 Common Commercial Real Estate Mistakes to Avoid

In the world of commercial real estate, one wrong step can mean the difference between a lucrative investment and a financial quagmire. At Mullen, Holland & Cooper, we know navigating this industry is no easy task. Whether you’re an experienced investor in Charlotte or a first-time buyer in Charleston, the complexities of North and South Carolina real estate deals can be daunting. That’s why we’ve distilled our years of experience into this piece to help you steer clear of potential pitfalls. We invite you to discover the top five common commercial real estate mistakes to avoid, so you can keep your investments profitable and your peace of mind intact.

Mistake No. 1: Falling in ‘Love’ With a Property

When you become enamored of a building’s architectural allure, location, or even its history, you might overlook potential drawbacks. You might ignore critical factors such as the building’s condition, market trends, or local zoning laws, all because you’re swept off your feet by the property’s charm. Remember, it’s crucial to conduct a comprehensive due diligence process, which includes a thorough financial analysis, property inspections, and an evaluation of all legal considerations. This way, you ensure your decision is based on hard facts, not just emotional appeal.

Mistake No. 2: Closing a Deal Before Obtaining Zoning Approval

Every parcel of land in North and South Carolina is governed by zoning laws that dictate the type of development or business activity on the property. Many investors overlook this critical aspect and are left with a property they cannot use as intended. Before you sign on the dotted line, confirm that your intended use aligns with the property’s current zoning designation. If it doesn’t, you’ll need to apply for a zoning change or a variance, which can be a complex and time-consuming process with no guarantee of success.

Mistake No. 3: Using a Residential Title Company for a Commercial Transaction

In a commercial transaction, easements, environmental concerns, zoning issues, or liens can all affect a property’s use or value. Selecting the right professionals to work with during the transaction process is paramount. Choose a title company with commercial expertise to protect your interests throughout the transaction.

Mistake No. 4: Not Planning for Delays

Many new investors underestimate the time it takes to close a commercial deal, and this lack of foresight can have serious consequences. Many factors can cause delays in the process, including environmental inspections, title issues, survey problems, financing hurdles, or zoning approval. Each one of these issues could tack on additional weeks, if not months, to your timeline. Therefore, it’s essential to approach your investment with patience and a realistic assessment of the possible duration of the transaction. This might include arranging for interim financing, having alternate tenants lined up, or simply factoring delay time into your overall return on investment calculations.

Mistake No. 5: Not Hiring a Knowledgeable Commercial Real Estate Attorney

Commercial real estate transactions are fraught with legal complexities, and even the smallest oversight can result in substantial financial loss or legal disputes. A seasoned commercial real estate attorney can guide you through zoning laws, contract negotiations, title searches, financing arrangements, and more. They can spot potential issues before they become problems, ensuring that your investment is sound and your interests are protected.

We hope these tips help you avoid the common pitfalls in commercial real estate and lead you toward successful investments. If you need legal advice for your commercial real estate deal in North or South Carolina, call Mullen, Holland & Cooper at 704-864-6751 or complete our contact form for a consultation.