There’s a saying in real estate investment: “Never make a passionate purchase, make a practical one.” Nothing holds more true for investors and buyers in steel building investments. Whether you’re purchasing the building as an investment, a means for business storage or warehouse or a place to set-up shop, here are the top three factors to consider when purchasing a steel building.
Due Diligence is Key!
For most people, this will be a commercial purchase. It’s extremely important to follow the due diligence protocol in determining whether the building is safe, environmentally sound, physically sound and financially sound.
We can’t tell you the amount of buyers who have tread into the commercial steel building market, venturing forward into a sale without ensuring the building’s physical assessments have been passed and are right for their business. Make sure you follow due diligence.
- Does the building pass inspection for where and how it’s built?
- Is it the right kind of steel for the right kind of weather and the best roofing structure (arch vs. flat): Will heavy snowloads collapse the roof?
- Is the overall structure sound?
From post frame buildings, to storage units, to large-space venues such as gynmnasiums, these questions matter. Depending on the type of steel, such as carbon steel vs. alloy steel (more common in small-structure construction such as ramps, overhangs or railings), the carbon content can be anywhere from %0.1 to %1.5% with most buildings today having a content around %0.1 to 0.%25. A building with a higher carbon content is structurally more durable.
Finding a good inspector to assist with this process is essential. Social media today, whether through Yelp or even a local Facebook business page with great feedback are sound places to start. You don’t want to get though a large-purchase process without all of the necessary information. Is the foundation correct for the area? Look at even small foundational cracks, don’t overlook anything at this part of the process. This could mean a number of things. While “shrinkage” in concrete foundation is common, it’s not a good sign if the cracks are not uniform, meaning they don’t show uniform weight displacement settling of the structure. Rather, your potential purchase is settling on unstable ground and that means a potential additional cost for you.
Make Sure You Understand Pricing
If you think you may not have enough for the investment, then you don’t have enough for the investment. Many people new to buying commercial steel buildings underestimate the upkeep costs that should be factored into the purchase. If you can make the purchase and the payments, but can’t afford the upkeep, don’t move forward. In most markets, it’s a small group of buyers for steel buildings (which are mostly large square-footage spaces). Once you own the building, it’s just not as simple as a house sale. Steel buildings, particularly in smaller markets and today’s economy, can sit on the market longer.
If Building: Choose the Best Supplier
What makes a good steel supplier? Always look local or state-side, first. Mark-up costs, shipping costs and customer service responsiveness are the largest factors in whether the building costs run amok. While the top suppliers nationally may give great quotes, these are typically for greater amounts of product. Again, we’d suggest social media, a local Facebook page for a mid to large-size contractor and asking about their supplier. Their reputation and connections within the industry will be valuable.
Buying a steel building means most likely owning a sizable property. Even if the building and the price looks right, taking the time to do your research will ensure less headaches for you, down the road.