Finding  your best location.

A time and money saving guide to avoiding bad real estate investments for businesses of all sizes!

Red Flags

You need to watch out for these in site selection. Some, if not all of these, can be site killers.

Believe it or not, I have run into every one of these problems in my work as a commercial real estate broker and site selector for a national franchisor. These are just some of the problems that can hit you between the eyes. Be careful and check everything. Don't rely on hearsay or birdseye viewpoints.

Get the facts instead.

The following is a summary taken from the book, Site Selection finding and Developing Your Best Location by Kay Whitehouse, CCIM

Red Flags

1.   PROJECTS COMING SOON: Sometimes they never come.

2.   UNCOMPLETED PROJECTS: When the projects do actually begin construction, it is not unusual for a project to hit a snag, run over budget, or simply be poorly planned and come to a dead standstill before completion.  These delays can destroy your project.

3.   TRAFFIC JAMMERS: Traffic can be wonderful for your business but watch out for potential traffic jams going in and out of your site.

4.   INGRESS AND EGRESS (GETTING IN AND OUT): Your clients or customers need to have a safe way of getting in and out of your business. Alternative entrance and/or exit will cost you thousands of dollars in missed or late deliveries and impatient clients or customers.

5.   TREES: Trees are beautiful.  Don't be caught with your business hidden by trees the city, county, or state won't let you cut down.

6.   ENDANGERED TREES OR PLANTS: Trees can also be endangered species. Double check the endangered species list before buying a site that you can't build on.

7.   MORE TREES: Be careful of the cost of clearing a property that is well populated with trees and foliage.

8.   TOPOGRAPHY: Get an estimate before purchasing a site that you will need to fill, grade, remove boulder, de-muck or any other preparation needed to build on your site.  It might cost as much as your building.

9.   SITE TOO SMALL: Don't try to squeeze a project on a piece of property that is too small.  You will have to fight for every parking space, every easement, every setback and your project could still be inadequate for your project.

10. SIGNS: Find out the guidelines for your signage from your city or county.  You don't want to be left with a great site but no one knows you're there.

11. COMPETITION: Be careful of your competing neighbors.  Don't start a project that will make you number two.

12. DON'T GET CAUGHT BEHIND ANOTHER BUILDING: You have a great project.  Be sure to check the site plan so that you are not hidden by any structure or access.

13. CROSS PARKING: If your project is an out-parcel to a shopping center and needs additional parking for your customers ask the shopping center developer if he can spare a few squares (parking spaces).

14. CROSS PARKING, PART II: Be careful of reciprocal cross parking easement.  Sometimes cross parking agreements say if your project uses their parking then their project can use yours.  Which defeats the idea.

15. DON'T GET CAUGHT IN THE MIDDLE: Planning your project in the middle of two similar projects can be risky.  Customers will not stop if it is inconvenient or untimely.

16. MEDIAN CUT: Line up your project with a median cut.  Its inconvenient to make a u-turn in order to enter your business.

17. FUTURE ROADS: Double check for road construction.  Road construction can reduce accessibility for long periods of time or re-route the road from your project leaving you off the main path.

18. FLOOD PLAIN, GREENBELT, SWAMP AND WETLANDS: Serious development problems, including a reduction in buildable acreage, can accrue with these types of property details. 

19. BAD SIGNAGE: If your project is a shopping center, don't get caught under a strict sign ordinance. You will have a hard time finding tenants if they cannot display an appropriate sign for their business.

20. BEING OUT-POSITIONED: Make sure if your competition is extremely close or across a four lane highway that your site is the most convenient for the time crunch, ingress & egress, visibility, parking, etc.

21. OUTSIDE THE HUB: Don't get caught twiddling your thumbs waiting for the heavy shopping area to find you down the road.  For optimal business be inside the hub of activity.

22. SEWER CAPACITY: Be sure you have a sewer for your project. 

23. ADEQUATE UTILITY LINES: Check the utility lines for any upgrades or replacing.  It's easier to do as you build your project vs. after your business is open and not working properly.

24. IMPACT FEES: To know your impact fees are very important and expensive.  Starting a project without the correct impact fees in your budget can bring your project to a halt.

25. SOIL TESTS: Always have your own soil test.  Keep in mind even if the Seller has a soil test done he wants to sell the property and he may not be looking out for you.

26. DEED RESTRICTIONS: Deed restrictions have been around for more than 100 years.  Be sure your have an attorney or a reputable title company to turn up any deed restrictions.

27. EASEMENTS: Title search and/or surveys should pick up any easements.  Easements can keep you from building your project where you want to on the site.

28. FUTURE ASSESSMENTS:  Can include new traffic signal or new utilities which will have you paying your proportionate share of it as a tax assessment.

29. ACCELERATION AND DECELERATION LANES: This is another one to plan on during your project and not after.  The department of transportation will not let you open your business if the road needs work.

30. OTHER USES: If you are an out-parcel to an office building or shopping center, find out what else is going into the center as well as on the other out-parcels.  Ask the developer or leasing agent to give you a written agreement that restricts a direct competitor from coming into the project.

31. VISIBILITY: Your client or customer can't do business with you if he cannot find you. You have to be seen!

32. WHAT'S NEXT DOOR: Check out your neighbors.  If your project is a residential area it may not be to popular across the street from a county jail facility.

33. NEW GROWTH AREA: New growths area are a lot of fun but because of the rapid growth taking place, they can get saturated prematurely.  Don't be "too much, too soon."  don't go charging in with the cavalry until the settlers get there.

34. REMODELING: If your plan is to remodel, do it well.  Don't cut corners.  Establish a whole new image and identity for yourself.  It wouldn't hurt to find out why previous occupant didn't make it, or is no longer in business.

35. PREMATURE OPENING: Coordinate your opening with any project or projects that will establish your area. For example, new road, waterway, or shopping center, etc.

36. BARRIERS: Any barriers can bring an active area to an abrupt stop, or possibly change the entire atmosphere of a town.  Plan your project away from river, mountains, state forest, bridges, interstates and railroads barriers that might block your business access flow.

37. CURB CUTS: You cannot make a curb cut anywhere for an entrance to your property.  You need to contact the zoning and planning department and the department of transportation.

38. NEW ROAD: A project on a new road can cost you corrections or completion.  Make sure it is up to standards and has been dedicated to and accepted by the appropriate city or county.

39. LEASED PROPERTY: If you are purchasing an improved property that you want to use immediately, before closing have the Seller vacate all the tenants and save yourself the headache.

40. TITLE COMMITMENT: Title Insurance companies research the seller's title and write an insurance policy that provides coverage for a problem that might come up at some future date that could affect the title.  Ask the seller to provide you with a title commitment as soon as possible (within 15 days). If the title isn't clear then you will save time and money on other property tests.

41. AGREEMENTS: Words are cheap.  Only written agreements are recognized, so get it all in writing.

42. GET A SURVEY:  If there has been a recent survey within 3 months by a certified surveyor it should be adequate.  Make sure the legal description, acreage, buildings, fence, encroachments are the same as what is on your contract.

43. FEASIBILITY STUDY: Watch your expenses and estimate your projected sales or income realistically.  Underestimating your costs, being misinformed, or too optimistic about your future sales or income for your project can result in financial ruin.

44. OLD GARBAGE OR CHEMICAL WASTE DUMPS: A soil test is extremely important. Garbage and Chemical waste can produce toxic fumes or contaminate the drinking water, among other disasters.  Double check previous uses in case someone has plowed under waste and added top soil. 

45. ACCESS ROAD OR FRONTAGE ROAD: Some areas are using a frontage road that runs along the major highway with limited entrances or access.  Your competition might have been grandfathered in and an advantage.

46. IMPROPER CONTRACT: Be sure to include all the clauses you need in your contract.  If you need an easement and the seller is to provide it, add that clause to your contract.  Have all clauses, agreements and contingencies in your contract.

47. DEVELOPMENT STANDARDS: Check the requirements for developers and developments with all agencies.  The water district, environmental agency, tree and wildlife preservation board, as well as the local planning and zoning board requirements must be met.

48. GRANDFATHERED-IN ZONING: Buildings that are on property with grandfathered-in zoning should be discussed at length with the zoning department.  Most of the time, if you change the use or if the building is damaged you will have to adhere to the new zoning requirements.

49. ADDRESS THE INSURANCE: Insure the property at closing.  Contracts can be full of contingencies and take a longer time to close.  If you are going to be working on the property before closing, specify how insurance will be carried and by whom.

50. DON'T GET EMOTIONAL: The worst thing you can do is fall in love with a piece of real estate and want it no matter what.  When this happens, all your logic and business sense goes out the window.  Keep a good business head on your shoulders and look at the facts and feasibility of any projects.

MORE FLAGS TO WATCH OUT FOR

CEMETERIES- One old family grave in the middle of your property can absolutely ruin your site plan.

PLATTING- If you are buying a parcel of a larger piece of property that has been platted into several parcels, make sure the plat has final approval.  A preliminary approval could be affected by changes in zoning or building codes.

FINANCING- If you are going to need to secure a loan be careful to structure your contract subject to your financing.  If you do not add this contingency to your contract, and are unable to obtain financing, you could lose your escrow deposit.

PERMITS- If possible, try to have all of your permits in hand before closing on your site.

HISTORIC STRUCTURES- Buying a piece of property that qualifies as a historic structure which cannot be torn down, removed, or changed, can turn out to be a real historical event in your life.  Check it out.

ARCHEOLOGY FINDS- A good soil test might be able to prevent you from buying a piece of property only to later discover with just one bull dozer ride, that you have uncovered the "archeological find of the century."  This puts your whole project on hold until the "find" is worked, making your holding costs sky high.

WILDLIFE HABITAT- The habitat of an endangered species cannot be developed.  Know your property before you close.

MINERAL RIGHTS- If someone owns the mineral rights on your site, it can make it impossible to obtain a loan using the property as collateral because the mortgage is second to the mineral rights.

IMPROPER SIGNATURE- Make sure the person who has signed your purchase contract is the legal owner.  If the owner is a corporation or partnership, have your attorney verify that the person who signed the purchase agreement has the authority to do so.  You could spend money on engineering, soil tests, etc., and have the proper owner sell it right out from under your nose.

TREES NEXT DOOR- Trees on adjoining property can block your visibility or the visibility of your sign.  Deal with this before you buy the property and get any agreements with adjoining property owners in writing.

SINKHOLES- A soil analysis map might be able to alert you to areas prone to sinkholes.