The process of buying or renting business is often time consuming and may seem complex. However, by following a step by step process this can be simplified and help you ensure acquiring your new asset achieves your desired results - see Realestate.com.kh's Sale and Purchase of Businesses: A New Opportunity For Real Estate Agents? for more information.
In Part 1 this week we will look at acquiring business property as a whole and the first steps in identifying the right business for you.
Business Property in a Nutshell:
Business property is a form of commercial property and is predominantly acquired to generate monthly income. There are many types of business properties available in the Kingdom including bars, hotels and restaurants- amongst many other opportunities.
Keep in mind buying a business property is different from buying residential property. This is due to the fact that when purchasing residential property, return on investment is seen in the coming years. Purchasing a business will result in almost immediate monthly income. Therefore when looking to acquire a business property, there needs to be a proper analysis based on the businesses current profitability, and opportunity for growth.
Identifying the Right Business For You:
For business acquisition, you need to define the type of business property that you're looking for. It is not a simple process of investing and waiting for capital appreciation to rise.
The first step should always be research. If acquiring a business property is a new concept for you, talking to successful business owners and professionals in the industry can be a great starting point.
Once you have a general idea of the type of business property you are looking to acquire, the research should then become more specific. This involves looking at short and long term prospects of the business property, current market supply and demand, and hiring an expert to ensure you have covered all bases.
A simple example is if you were looking to buy or rent an established hotel business. The factors you should take into account include; looking at the reputation of both the hotel operator and brand, the duration of operation, current monthly overheads and average profit.
From here you need to make a prospective analysis, as to the predicted annual occupancy rate, potential physical improvements to the facilities and how your investment’s profitability looks in the long run.
Look out for next week where we take a further look into identifying the right business for you and the role that real estate agencies and lawyers play in this process!