Investing in commercial properties is one of the wisest financial moves you can make, assuming you do your homework. Whether you’re investing in a retail space, a warehouse, or a multi-family residential complex, there’s a lot of opportunities. Businesses will always need a space to operate out of and people will always need places to live.
However, if you don’t know what you’re doing or make a poor investment, your decision could potentially bankrupt you. As a new or experienced commercial property investor, it’s vital to always cover your bases before signing on the dotted line.
I want to help you do just that. Keep reading for five key things to know about commercial property investing.
1. Find the Right Realtor
First, you need to find a commercial real estate agent who’s familiar with the area and the market. They can help you find the right property based on your needs and top priorities.
For example, if you want a commercial housing complex in a specific part of town, they’ll be able to find the most appropriate options for you. Realtors are experienced negotiators and may be able to get a better deal from the seller.
2. Know the Industry
As a commercial property investor, it’s important that you understand the industry in which you are investing. Your financial security will depend on the success of whatever business leases out your building.
Of course, there are contracts that hold them liable for rent for ‘x’ amount of months. However, if their business goes under, they won’t have any money to give you. Make sure the property you buy lends itself to high-quality, dependable renters.
3. Consider Your Budget
As with any investment, you need to consider your budget. How much money do you want to invest in the property? Can you afford to buy it in cash or do you need to take out a loan?
Buying in cash is ideal if you have the money. In this way, you won’t have to worry about your own loan if you fail to get tenants quickly or if renters fail to make payments.
4. Determine Your Potential ROI
Next, commercial property buying comes down the numbers. Calculater how much you’re investing (initial and recurring) vs. your potential return on the investment.
This is especially important if the property needs a lot of work. Renovating a commercial property can be expensive. If you’re investing in a fixer-upper, make sure you know exactly how much work needs to be done and how much it will cost.
5. Know the Local Market
Finally, make sure you know the local real estate market. As a commercial property investor, you must understand that property prices will vary from neighborhood to neighborhood. Some locations are more desired than others for different types of businesses and business owners.
Your realtor should be able to get you a comparative cost analysis of the nearby commercial properties. They should also have enough experience to know if the property you’re looking at is priced fairly.
Are You a Commercial Property Investor?
If you’re a commercial property investor looking to make the best business decisions, I can help. My blog is dedicated to providing valuable information for people just like you. Be sure to check out some of my other articles before you go.
And if you’re in need of a real estate agent, contact me today to learn more about how I can help you find the best property for your needs.