A big part of planning for buying commercial property is considering your plan for divesting of the property or exiting your commercial real estate when the time is right. While you may not have an exact timeline in mind, an exit plan is meant to evolve over time depending on the investment and your future strategies. Our four considerations for a commercial property sale will help provide property owners with a foundation of preparedness.
Taking stock of the requirements and regulations your commercial property must meet is important when preparing a building for sale. Many cities require an inspection of the property before a transaction closing can occur, so if there are any code violations or city certifications that need to be renewed they will get flagged at this time. Reviewing your current contracts is also important because any contracts related to your building will need to be assigned to the buyer or a plan to terminate the agreement will need to be put into place.
Cashing out on a commercial investment is exciting, and presents the opportunity to make a profit on your investment. However, with capital gains come capital gain tax implications, but with some prior planning, there are ways to mitigate taxes incurred. Speaking with your financial advisor or wealth manager in advance of a property sale will help you identify the best strategic plan for you, which may include leveraging a 1031 exchange or certain types of trusts.
As the saying goes, “Don’t judge a book by its cover!” But when you’re preparing a building for sale, it is important to consider the condition of the property. There a few simple changes or improvements that can be made to help attract buyers. These changes can be completing paint repairs, cleaning up or adding to the building’s landscaping, and even adding warm lighting. Simple updates like these can add curb appeal and make for a good impression!
Investing in your commercial building through capital expenditures (CapEx) is a great way to build the value of an investment asset, but when you’re preparing a building for sale you won’t be able to reap the return on those expenditures. Typical capital expenditures are investing in larger scale projects like adding or improving the HVAC system.
Ultimately, to prepare for a commercial sale, you are most familiar with the status of your property and know the return from your investment that you’re looking for. If this article brought up some questions on how to prepare your commercial building for sale, speaking with a commercial broker is the best way to build a strategy for your building sale. Give Transworld Commercial Real Estate a call today at 720-574-2953 or visit transworldcre.com for more information.
Rachael Holstein is the Marketing Manager for Transworld Commercial Real Estate, a full service commercial real estate firm in Denver, Colorado. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle! Visit transworldcre.com for more information.