Your accountant can look at your company’s financial performance and strategic plan, and help you decide whether purchasing real estate is the right decision at this time. Your accountant can also help you get financially ready for the purchase—by making sure you’ve made a realistic budget and have up-to-date financial statements to take to the bank, and by advising you on how to optimize the transaction for tax purposes.
2. A banker
Once you’ve decided to buy real estate, you should see a banker. Your banker can help you understand how much money you can afford to invest to avoid taking on too much debt or putting undue pressure on your monthly cash flow.
Your banker can also give you a second opinion on your budget to make sure you’ve planned for all the expenses you’re likely to incur that might otherwise be overlooked— and offer financing for these items as well. Typically, they include the following:
- renovations to your new location
- moving costs
- additional machinery and equipment
- downtime as you change locations
- a contingency fund for overruns and unexpected expenses
Labossière notes that some banks offer more favourable loan terms than others, so it’s a good policy to shop around when looking for a bank to finance your real estate purchase. These terms can include financing a higher percentage of your purchase, giving you more years to repay your business loan and offering a postponement on principal repayments in the first months in your new premises, when you face high expenses.
3. A commercial real estate agent
Your real estate agent is another key advisor who can help you find a property that meets your needs, within your budget.
A good commercial real estate agent will be knowledgeable about your local market and may even know about available properties that are not listed for sale, Labossière says. You should make sure your agent is familiar with the special requirements of your industry and your business.
Once you’ve found a suitable property, your agent can also advise you on negotiating the transaction with the vendor and shepherd you—with your lawyer—through the offer to purchase and closing stages of the transaction.
“They’re as important as the banker, because they will be accompanying you through the whole process,” Labossière says.
4. A lawyer
Your lawyer plays an important role once you’ve found a property and decided to make an offer. Labossière recommends getting your lawyer to review your offer to purchase to make sure it includes all the necessary conditions. This is especially important when the property is held in a corporation, he says. Your lawyer can also help you negotiate with the seller.
Once you’ve struck an agreement, your lawyer will also review the sale contract and perform other aspects of your due diligence, such as conducting a title search and investigating leases with tenants, zoning issues, outstanding taxes, liens, easements, court orders and other encumbrances.
Your lawyer can also advise you on the tax and other personal finance implications of owning real estate, notably the advantages of placing the property in a holding company separate from your operating company.
5. A contractor
If you’re constructing a building or doing substantial renovations to an existing one, you will need to hire a contractor. Here, Labossière recommends getting several recommendations from your advisors and other business associates.
Then, it’s important to get references from the contractors you are considering and to follow up by interviewing former clients to get their opinions on the contractor’s work.
Once you’ve chosen a firm, you should negotiate a contract that includes a detailed description of the work to be done, a timetable and the price.
“You goal is a project that’s on time and on budget,” Labossière says. “The more detailed and itemized the contract, the less room there is for disputes.”
6. An operational efficiency expert
It’s often a good idea to get the opinion of an operational efficiency expert on whether a prospective property is suitable for your needs. This is especially important for manufacturers, who will want to place machinery and equipment for optimal productivity.
Once you've purchased your property, the efficiency expert can advise you on laying out your operations to minimize waste and maximize value.
7. An environmental consultant
Many banks, including BDC, require an environmental assessment report as a condition of financing a real estate purchase. The assessment determines whether a previous occupant has contaminated the property.
Since cleaning up contamination can be hugely expensive, Labossière says it’s important for the environmental consulting firm to be qualified and experienced. It should be ready to make firm conclusions about the environmental condition of the property and stand by those conclusions, and should carry liability insurance in case of error. He recommends asking your banker for a referral.
8. A building condition inspector
While your bank may not require a building condition inspection of the property you plan to purchase, it’s a good idea to get one. Similar to a residential home inspection, a building condition inspection can alert you to issues with the building that will require substantial investments to correct.