What Stats Should You Consider When Buying Property for Your Business?

Posted on February 7, 2018

These are some of the most important numbers you’ll need to consider when buying real estate.

When investing in property to expand or start your business, you need to make the most logical, mathematical decision possible; it’s the best way to ensure a return on your investment. For a home, consumers often weigh subjective factors, like personal taste, more heavily, but since bottom-line profit and long-term functionality are your highest priorities, you’ll need to take a hard look at the statistics and make a colder, more objective choice.

But what statistics are most important for buying business properties?

Important Statistics to Consider

These are some of the most important numbers you’ll need to consider when buying real estate:

1. Median and average prices.

First, you’ll want to look at the median and average prices in the area. The median price is the price at which half the properties in the area are more expensive, and half are less expensive; it’s a good indication of the middle-of-the-road choice in a given neighborhood, and can help you find out how appropriately priced a property is for your intentions.

Similarly, the average price is the sum of all prices divided by the number of properties in an area; the average and median price for an area might be very similar or might be very different, depending on the price disparities between properties.

2. Square footage.

You’ll also need to think about the square footage of your target property, and the cost per square foot. Most real estate websites offer “price per square foot” as a general metric on each listed property, but it’s easy to calculate yourself as well.

This tells you the relative value of your property, based on its size. This is especially important if you’re investing in more space than you need, anticipating future growth.

3. Potential rent.

If you’re considering subletting the property to another business, or if you’re specifically buying an office building with the intention to rent it out, you’ll also want to calculate the potential rent. If the building has had business tenants before, you can use historical prices as a baseline. If not, you can look at prices in similar places in the area and change your projections accordingly.

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