Are You Ready To Become a
Commercial Real Estate Investor?
There’s no way to sugar coat it - investing in commercial real estate is not an endeavor that should be entered into lightly. But, if you’ve done your research, it can become a valuable part of your investment portfolio and help you accumulate long-term wealth.
Think you may be ready to take the plunge? Consider the following points first:
Types of Commercial Properties
Finding your niche will help you prioritize your goals and align your strengths before you begin your foray into the commercial real estate investment world and go deeper to understand commercial property management, tax laws and real estate investing secrets. To help you do so, the first thing you should know is, there are several kinds of commercial properties. The six most common are:
- Office spaces
- Retail spaces
- Industrial spaces
- Multi-family properties
- Hotels
- Development sites
Benefits of Commercial Properties
Commercial real estate investing offers several advantages, some of them include:
- A virtually guaranteed monthly income from renting your spaces
- Eligibility for certain tax benefits
- Power over maintenance and operating expenses
- Financial leverage gained will help you when making real estate purchases in the future
- Increased portfolio diversification
- Value increases over time, especially if improvements are made to increase the building's ability to earn income or its intrinsic value
Are You Ready To Invest in Commercial Real Estate?
Still interested in commercial real estate investments and real estate buying inspection, but don’t know if you should take the leap? Ask yourself the following questions to help you make a decision:
- Do you think big? In order to invest in this industry, you must be open-minded and have the ability to think big. For instance, if you are deciding between a five or ten unit apartment, you should go for the ten. This is especially true if both properties require the same commercial financing. Another thing you should always take into consideration is the careful inspection of the real estate you are buying, because in case you are buying a real estate which has, for example a damaged concrete, you will also deal with the repairment of the concrete cracks.
- Are you good at building relationships? Building successful business relationships is important in every sector. But, for commercial investors, it's a vital practice - especially when it comes to financing. Let's say that the property you are interested in has a high price tag, you will probably need funding. What better way to get your capital than with a private lender with whom you’ve already built a positive relationship?
- Are you sure you can do your due diligence? Your ability to do comprehensive research can determine the failure or success of your foray into commercial real estate investing. Once you’ve chosen your niche, research everything you can get your hands on that's connected to that specific sector. You may also want to ask the members of the local REI club any questions you may have, head online to research various financing options, and reach out to private lenders ahead of time so you know their exact requirements. Another great idea is to analyze your desired market and its current trends. Have a conversation with current inhabitants and the people that live in the surrounding neighborhoods. Ask them about the vacancy rates, other developments in the surrounding area, etc. Any information that helps you determine the viability of your investment will work to your advantage.
If you have answered yes to the above questions, it’s a fair bet that you have the confidence necessary to succeed in commercial real estate. Good luck!