How to buy commercial real estate in Ukraine
Commercial real estate is one of the best investments in the conditions of inflation growth. Moreover, non-residential objects are bought not only to open and develop their business, but also for the purpose of investment, for example, for the subsequent leasing of premises. Let's consider how to buy commercial real estate profitably, correctly and safely.
How to choose commercial real estate
When choosing a space for an office, store, cafe or other commercial facility, you need to examine many factors in order to purchase just the right property.
The main criteria for selecting commercial real estate:
Location of the object. Before you go to look at proposals from sellers, you need to study the target audience and understand what location will suit them. If it is a coffee shop, it is important to choose a passable location. For an office whose employees are in contact with clients only online, it is not necessary to choose an object in the city center. If you need to open a dentist's or cosmetologist's office, which have already built up a reputation, the location does not matter much either, as clients will still come.
Infrastructure and neighborhood. Even before buying real estate, you should study the nearby infrastructure. For a narrow-profile store, a location near a shopping center may be advantageous, since the latter provides a large flow of people. At the same time, if there is already a competitor with the same goods nearby, it is better to look for another option.
The area of the premises. To understand what area the facility should have, you need to make a list of the necessary equipment and furniture. It is also worth focusing on the number of employees. It is not worth buying a room "to grow into", as its maintenance may prove costly. But it is also not advisable to limit yourself to too small an area if you need to accommodate a lot of people.
These are not all the factors to consider when looking for a suitable commercial property. Depending on the type of business, you should also assess whether the layout of the premises is suitable, whether there is a separate entrance, what condition the communications and utilities are in, what load the power grid is designed for, whether there is access to sewage. For some owners of non-residential objects can play a role floor, the presence of parking nearby, soundproofing of the room, etc.
Risks when buying commercial real estate
Compared to residential real estate, the purchase of non-residential premises carries even more risks. If you know them in advance, there is a better chance to protect yourself from trouble.
What are the risks of buying a commercial property:
changing market conditions - a downturn in the economy or other circumstances may reduce demand for and value of real estate;
downtime - if the wrong property is selected, it can be difficult to find tenants, which directly affects the return on investment;
technical problems - any real estate object requires regular maintenance and repairs, but sometimes the financial costs can be substantial, for example, to repair the heating system, wiring or roofing;
low liquidity - commercial properties are often harder to sell than residential properties, so it takes longer to find a buyer;
problems with documents - an improperly drafted contract of sale can lead to disputes about ownership and other legal nuances.
Proper due diligence when buying commercial real estate plays a particularly important role and can reduce several risks to a minimum. Other risks can also be reduced through careful selection of the object.
What to check when buying commercial real estate
In order for the transaction to be successful, it is important to check the main nuances when buying a commercial property:
The seller-individual must be of legal age, capable and aware of his actions. When buying real estate from a legal entity, it is necessary to check the charter, power of attorney, authorization of a higher authority (everything that confirms the right to sell the object).
The seller must show the original documents that confirm ownership. It is also important to make sure that there is a registration record in the Bureau of Technical Inventory (BTI).
There should be no onerous conditions attached to the transaction. The object must not be pledged or under arrest, which is confirmed by a certificate of the state notary office. Also, the property should not be bound by property rights with third parties.
If there is no experience in such transactions, it is best to entrust the due diligence to professionals. Otherwise, there is a risk of overlooking problematic issues.
The main stages of buying commercial real estate
Regardless of what you need to buy - a room for a store or a restaurant, a warehouse, an office, an industrial facility for a future factory, the purchase process will be approximately the same.
The main stages of acquiring a commercial object look like this:
Selection of the real estate object taking into account the purposes of its use - for own business or for further lease/resale.
Inspection of the premises. This will help to identify advantages and disadvantages. Also during the inspection you can understand whether there are competitors nearby, whether the access is convenient, how close the metro stations or public transportation stops are.
Analysis of documents. At this stage it is necessary to check the title documents, cadastral plan, certificates from the BTI, sale and purchase agreement and so on. It is best to do all this together with an experienced lawyer. The specialist will also check the property for co-owners and utility debts.
Conclusion of the sale and purchase agreement. If the parties have discussed the terms and everything is satisfactory, it is possible to proceed to the signing of the documents. The owner of the object or his representative with a power of attorney must be present at the transaction.
Payment. Payment is made in accordance with the terms and conditions of the sales contract. The parties must agree in advance how the money will be transferred: by bank transfer, in installments, etc.
The final stage in the purchase of commercial real estate is the registration of the object for the new owner and the issuance of a certificate of ownership. From this moment, the owner can perform any actions with his real estate: rent, sell, inherit, give.
Additional expenses when buying a commercial object
In Ukraine, when buying any real estate, including commercial, there are additional costs. When concluding a sale and purchase agreement, the state must pay a fee of 1% of the transaction amount or of the value of the object specified in an expert appraisal. If it is a legal entity that buys state-owned real estate, the fee is reduced and is only 0.1% of the amount in the contract.
When selling commercial real estate, the seller will have to pay a military fee of 1.5% of the value of the object. The payment is confirmed by a notary when the contract is concluded. At the same time, the buyer must pay a contribution to the Pension Fund. Its amount is 1% of the amount specified in the sale and purchase agreement.
Why it is worth turning to professionals when buying commercial real estate
The buyer can appreciate the assistance of an experienced realtor and lawyer already at the stage of selecting an object for purchase. Turning to a real estate agency, he will not have to get lost in the chaos of a large number of advertisements for the sale of commercial premises. The realtor will first find out what object the client is interested in, after which he will study the base and offer a choice of only suitable and proven options. This significantly saves time and nerves of the buyer.
Other advantages of cooperation with a real estate agency when buying a commercial object:
wider choice of offers - often in the public domain it is not possible to find interesting premises, while realtors have their own exclusive options from regular sellers;
relevant objects - the buyer will not have to waste time examining premises that are not suitable for his type of business, as the realtor will select exactly those objects that fully meet the parameters specified by the client;
absence of legal risks - the agency has its own lawyers who carefully check each document and the seller to guarantee the buyer the legal purity of the transaction;
competently drafted contract - lawyers who work on the buyer's side will help to draw up a contract taking into account his interests;
support - if commercial real estate is purchased for the purpose of investment, the agency can undertake the search for tenants or buyers in case of resale of the object.
Contact the real estate agency "Mayak" if you need to buy commercial premises of any type in Kyiv or Kyiv region. Realtors and lawyers will conduct the transaction without risks and with maximum benefit for the buyer.
