Saturday, 23 February 2019
Agent Resource Center
This Old House - Do-it-Yourself

4 Smart Tips for Successful Commercial Real Estate Investing

Written by Posted On Monday, 11 February 2019 01:23

Commercial real estate investing can be much more complex than residential projects. Learn 4 tips that will help your investment be a success.

Ask around among any money-savvy millennials and they'll tell you to invest in real estate before anything else. Despite the housing crisis of the late aughts, there has been a massive climb in housing prices over the course of this generation's lifetime. Anyone who is considering commercial real estate investing is making a smart decision about what to do with their money.

Here are four tips to remember if you want to be successful in real estate investing.

1. Understand What You Want in an Investment

If you're really serious about the idea of investing, then you need to connect your decisionmaking to a concrete idea of profit. It takes a lot of time and research to decide whether or not something is an investment. When you're deciding to put down money for an investment, you're making a decision about a large amount of money and how you plan for it to grow.

Your growth is going to be stunted if you don't consider all of the potential costs. Take all costs into account including taxes, fees, and whatever it's going to cost to get a broker to help you get a property that works for you. All of these costs cut into your initial profits or else raise the bar of how much you have to gain in order to make your investment worthwhile.

In order to make a clear-headed decision about whether or not you're making a good investment, think about whether this can help you reach your goals. Be honest and critical when it comes to thinking about what you're looking for.

If you can't turn a profit on this commercial real estate property, then it's not an investment. However, if you can make use of it in another way, as in for your own personal business interests, it might be another sort of investment. Acquiring a property isn't bad, but it's not an investment if you have to use the property to make it worthwhile.

2. Long-Term Costs Are a Reality

No building is constructed to last forever. There are going to be ways that any building needs to have some work done on it to be worthwhile. Don't get upset when you have to put some money into a property. Face this reality and start looking at the costs realistically.

Make sure you hire an inspector that you can trust before you sign a contract on a building. While the seller is going to tout any changes or repairs that have been made in recent years, listen for what they're not telling you. Those are the elements that are going to need some time and attention.

A new electrical system for a commercial building could cost you tens of thousands of dollars on day one. If you're looking to lease it to a manufacturing company, it needs to be equipped to supply the power that large manufacturing machines need.

If there are problems with the roof, waiting to fix it is going to end up costing you more in the long run. If your tenants have their equipment damaged due to a leak, they'll hold you responsible. Going to court is more than a headache, especially when you find out how much you owe.

3. Find Your Niche

Whether you're building an app, manufacturing widgets, or writing poetry, developing a niche is vital. It ensures that you're able to carve out an area where you can specialize and excel. If you're not finding your own voice and your own specialty, you'll have a tough time marketing yourself.

If you're new to the industry, devote some time to learning the nuances of each type of property in your region. There are big differences in what's expected in office space, raw land, and strip malls. Each type of tenant is going to look for something different when it comes to these spaces.

While most investors want to be a jack of all trades when it comes to managing properties, it's better to be a specialist it one niche. You can always branch out later on. The deeper your knowledge is around a different type of property is, the better off you are.

Most people who will want to work with you are going to look for ways to expand and grow their businesses. If you're offering something in the world of strip malls and you start investing in a new strip mall, they're going to raise an eyebrow. When you start moving into new territory, they're going to trust your judgment, hoping that lightning strikes twice.

4. Keep Your Eyes Peeled For Issues

When you're trying to make your first commercial real estate investments, any of the problems that lurk under the surface become your problem. If someone slips and falls on your property because of potholes you failed to fill in, then that's on your shoulders. If a chunk of the building falls and crushes someone's car, you should have checked for structural integrity.

This can go much deeper than property damage and physical injuries, however. Lots of investors have unknowingly bought into properties that have turned out to be problematic later on. Buying a property where another company dumped hazardous waste that's now in the water supply could become a problem for an unaware investor.

Disposing of things like hazardous waste is absurdly expensive. If you inherit this problem, you're going to be on the hook for it. Make sure that you check for every kind of issues before you sign the dotted line.

This is why it's always good to work with commercial construction lenders who can help advise you before these issues arise.

Commercial Real Estate Investing is a Smart Idea

No matter what kind of investments you're making in the coming years, commercial real estate investing should be part of your portfolio. Even as retail is waning and manufacturing seems stalled, there are other places in the commercial world that are booming. As tech companies require more and more space to get work done, the demand will only increase.

For more on the fastest growing markets out there, check out our guide for investment tips.

Listing Additional Info

  • State: Mississippi
  • Address: 3309 Walnut Street
  • City: Hattiesburg
  • Zipcode: 39402
  • SOLD: no
Rate this item
(0 votes)
Janice rangel

Janice Rangel is author publication for property representative, insurance advisor, and agents real estate industry for around ten decades today. I expect folks will love to see about my views and adventures from the business and also please contact me personally should you would like to explore my content articles farther.
Set it and forget it Marketing, Agent Trusted for 21 years. Click Here

Search by State:

Agent Resource

How to capture your next prospect - click here

Realty Times

From buying and selling advice for consumers to money-making tips for Agents, our content, updated daily, has made Realty Times® a must-read, and see, for anyone involved in Real Estate.