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Top 3 Mistakes Made in Commercial Real Estate

Posted on: May 27, 2015

Commercial real estate deals are often full of mistakes, and in many cases these mistakes are the result of not having an experienced South Florida commercial real estate attorney present during negotiations and at the closing. A knowledgeable attorney can help catch any unfavorable terms in your contract, perform adequate due diligence on the property, help you come up with an exit strategy and more.

Commercial real estate deals can be very complicated, but an experienced attorney can break down every aspect of the deal and explain it so that you know exactly what you are getting into.

Mistake #1 – Not performing due diligence

There are several important due diligence steps that you need to take before you buy a commercial property or sign a lease agreement. You or your attorney will need to have the physical condition of the property inspected such as structural components. The title will need to be thoroughly inspected and there can be complicated zoning and land use requirements that can affect your future business at the location. A good attorney will always perform every step of due diligence and ensure that the property and title are free of unknown defects before you enter into any deal.

Mistake #2 – Ignoring the local market

The second important due diligence step when it comes to commercial real estate is to evaluate the local market. It’s more important to evaluate the market before you evaluate the property itself, because a low quality property in a great market can still do well, while a great property in a bad local market can lose money. Every local market in Florida is different, and an experienced attorney can help you analyze the local market, look at demographic trends, and help you perform other aspects of market due diligence.

Mistake #3 – Not having an adequate exit strategy

You need to have an exit strategy if things don’t go as planned with your business venture or investment. A South Florida commercial real estate attorney can draft an exit strategy into your contract and give you a way out if things don’t go as expected. You often want to have not just one but several exit strategies in your contract for the various scenarios that can play out. Also, you will want an exit strategy for when things go well so that you can exit at the most opportune time to maximize your investment.

If you are in the process of negotiating a commercial real estate deal, talk to Mark Schecter at Schecter Law today for more information about how to avoid mistakes during your deal.