I’ve seen quite a few deals where people have bought commercial properties based on the numbers and images from the agent.
While, as you know I’m all about the numbers… My basic rule of thumb is the numbers have to work… Never buy based on gut instinct or anything like that.
But here’s the deal. If the numbers work… you still should go an inspect the property.
Over the last few months, I’ve been looking for a shopping centre to buy.
I’ve made an effort to go and inspect them as I find them.
Why, well, we’ll get to that in just a second.
Obviously, the agent had taken images for the listing, some of the listings I’ve looked at have had quite extensive galleries… But you’ve got to remember this”: Agents are always trying to make the place look amazing. That’s their job.
If they are smart and have a professional photographer, then the images will be taken specifically to not show you what’s wrong with the property.
But that’s just ONE of the reasons you should always go inspect the property yourself.
Should you still get a building inspection?
Short answer? Yes. Absolutely.
I’m not a builder, not a plumber, not an engineer. So when it comes to looking at defects or potential issues in the building, I find it best to make sure you’ve got a professional to do a full inspection…
So you’ve got that covered… Why do I need to get on site myself?
It’s like in the movie “The Castle”… It’s all about the “VIBE.”
Here’s what I mean.
One shopping centre I inspected, I sat outside of for 3 or 4 hours. Customers came and went, doing their shopping. You know who didn’t come and go?
A rough and rowdy pack of teens. They just arrived and stayed. They smoked, yelled, fought, harassed the odd passer by and generally caused trouble. All day!
So I went back the next day… and a couple of days after that.
This is the sort of thing that doesn’t show up in real estate agents images. I had to tell him he was dreaming.
Then I had a reality check.
I spent some time hanging out in the centre. Downed a few coffees and a pie or two and just watched. Then I started chatting to some of the shop owners, and they told a different story.
That centre was run down and was getting worse by the day. The vacant shops had not only been vacant for quite some time but had only ever had short tenancies.
One tenant pointed out that the natural light was terrible in the whole centre but especially bad in those shops.
Again, these sort of things can be very hard to pick up from a real estate agents photos.
While you should never buy a property based on gut instinct, sometimes it’s best to NOT buy a property on gut feeling.
I know that’s confusing and it doesn’t always make sense to me either, but here’s the thing:
If you go a place where all the numbers stack up but you see things that just don’t feel quite right…
You chat to the tenants, and they seem unhappy and tell you about all the things that are wrong with the place, it’s a good chance to weigh up all that information and decide what you are, and are not prepared to take on.
Some things you can fix, other things may be unfixable or more trouble by half to try.
Not all the information you need during the searching and due diligence period is factual… Sometimes you just have to go there and get the “VIBE.”