Top mistakes for commercial investors to avoid

Investing in California real estate can bring the payoffs you want – if you do it right. Learning about common mistakes to steer clear of when buying property can help you make investments wisely.

One trap investors fall into is believing they do not need an attorney’s help to manage these often-complicated transactions. Even experienced and successful businesspeople can overlook or misunderstand important legal issues. Selecting the right real estate attorney can go a long way towards a successful purchase.

Overlooking relevant laws

There are many laws that can affect not just the purchase transaction but also how you will be able to use this piece of real estate in the future. Relevant legal issues may include building codes, zoning regulations and easements. If you purchase real estate with existing violations on it, you may find yourself responsible for fixing them. Identifying problems from the start can keep you from landing yourself with a costly mistake.

Getting an inflated valuation

Proper valuation is essential to a successful deal. Some investors think getting an inflated value is good for obtaining financing. However, inaccurate values can sabotage the deal further on and may even constitute fraud, which can result in some serious legal and financial repercussions.

Failing to perform due diligence

If you are an investor dealing with other businesspeople, you may think you can tell when the other side is not being completely honest. In fact, many investors end up suffering because they did not realize the other side did not provide full or accurate disclosures, including those required by law. Do not assume the seller will tell you everything you need to know. It is in your best interest to look into matters yourself and get the information you need.

Signing without careful review

Read any and all documents, including the contract very carefully. Have your attorney review everything. Once you sign, it will become much harder to address any problems. Generally, courts expect commercial investor buyers to do due diligence and to be aware of potential pitfalls; in most cases, they do not tend to accept ignorance or misunderstanding as a reason to get investors out of any problematic clauses.