Commercial Property Investment: A Good Market For The Wary Investor
As our economy continues to recover, interest in Commercial Property is on the rise as well. Currently, investment opportunities abound in Ocean and Monmouth counties based in part on the number of bank owned “distressed” properties and in part upon the physical and financial devastation caused by Hurricane Sandy. This combination has led to low prices which were unimaginable before the economic downturn. For savvy investors the upside in this market would appear to be significant indeed.
At the same time, however, markets such as these call for extreme caution and heightened “due diligence”. For example, banks and government agencies looking to sell off unwanted inventory will sometimes accept exceedingly low offers, but they will generally offer no representations or warranties whatsoever as to physical conditions, structural defects, on-site contamination, mold, off-site conditions, or even the marketability of title.
Even those investors with the knowledge and resources to reconstruct or rehabilitate physically damaged properties must beware of hidden dangers. For example, recent Court opinions have upheld a city’s ability to issue a stop work notice in the middle of a major rehabilitation project when it was discovered that certain structures needed to be entirely rebuilt. For those buying properties damaged by Hurricane Sandy, it is also essential to know whether elevation standards have been enhanced.
In short, Commercial Property investment can be extremely lucrative but conducting a thorough “due diligence” review with the help of qualified advisors is essential.