6 Must-Consider Factors When Investing in Commercial Real Estate
By: NAI Latter & Blum
So you’re embarking on a journey in commercial real estate investment. Commercial real estate investing can be incredibly rewarding by providing additional income, security, and longevity that are less common in other types of investments. However, whether you’re looking at an office space, industrial location, flex space, or rental property, amongst the varied other commercial real estate properties, it is important to consider a few factors prior to beginning your new journey.
It is pivotal to ask yourself, are my financials organized to invest? How much do you want to invest? How will you finance the investment? Will you involve lenders? What kind of return do you need or expect? Remember to stay organized and plan a budget prior to obtaining the property. It can help you close the sale more quickly, and also figure out what property fits into your financial plan.
Where is your commercial investment going to be located? A solid location for the type of property you plan on investing in is important. If it is an office building, will it have the necessary amenities? For retail plaza, is there good vehicular and foot traffic? Asking yourself these questions based on the specific type of property you’re investing in can be an important factor.
Similar to location, demographics play a part in the success of your investment. The number of people in the area, their race, religion, financial status and more can all play a major part. If you’re looking at a neighborhood where the population has been decreasing steadily, you may want to continue to look elsewhere.
4. MARKET TRENDS
It is extremely important that you, as an investor, understand the market and its trends. Having solid knowledge of the fundamentals of market trends and dynamics of the kind of investment you’re making can help you ensure a more prosperous future.
5. PROPERTY APPEARANCE
Of course, we cannot predict exactly who your future tenant might be. However, it’s common knowledge that all tenants want to rent out an aesthetically pleasing, quality property. Take steps to ensure the exterior paint is fresh and all lighting is working. If there is land around the property, you may want to hire a landscaping company to spruce it up a bit. Basically, do what you can to be sure you are putting your best foot forward and making a great first appearance to potential tenants.
6. TAKE AN ACTIVE ROLE
Some of the most successful commercial real estate investors will advise that taking an active role is very important in the success of your investment, and achieving maximum returns. By keeping tabs on the operations of your investment and the development of the market, you can be sure to make the right moves for your investment’s security and financial well-being.
Overall, there are countless factors to think of when exploring commercial real estate investments. However, understanding some of these factors and doing your due diligence to research and organize yourself can be an important step in your investment journey.