Commercial Real Estate
Know Your Investment Goals
Investors understand that the first step is setting their investment goals. You need to know what type and amount of risk you are able and willing to take on. You will also need to decide what your ultimate goals are for your investment. Are you looking for long-term growth, or are you seeking short-term returns?
When considering commercial real estate investments, are you more concerned with long-term gains via the appreciation of the property? Or are you looking for a property that will help you earn a steady income? You can make the right investment decisions and reach your goals when you know what you want to achieve.
When searching for the right property in which you’ll invest, there are things you need to consider. Location is the first consideration as this will determine your ability to attract tenants. The location of the property will help to value investment property properly.
And it’s essential to understand the quality of tenants that you are targeting. You’ll want to target tenants within a sector that will grow in the future. Focusing on this will ensure that you choose a market that will be able to pay the rent. Establishing a tenant lease that protects you and the property is also an important consideration.
Property condition is another factor when choosing your investment. Determine the state of the property and estimate the costs of any potential repairs. If you know that you will be embarking on a major renovation, is this property worth the investment needed to get it to where it needs to be?
As a first-time commercial real estate investor, it’s easy to overlook opportunities that more experienced investors would quickly identify. Look for what would help a property appreciate over time, beyond just the value of the land. What is the area is in the works that could benefit your investment? Is an established company on the verge of building a new location that would bring business your way? Is this happening soon? Investment properties that are older and may require high renovation costs on the front end may offer an exceptional ROI via high-quality tenants.
Avoid Common Pitfalls
When considering an investment property, you need to have an accurate picture of the costs that ownership will require and the actual income the property can draw. Make sure that you investigate any income reporting from prior owners. Complete a thorough assessment of the property with the help of a trusted commercial real estate agent, if possible.
Deciding to Own or Lease
The decision to buy or lease property will be very personal and will vary by individual or company. Owning or leasing will depend on the buyer’s specific needs and position and considering the business’s maturity or structure. When you own the property, you are flexible in the improvements you make to benefit your business. You can also use it to borrow against it should you need to in the coming years.
Walking through all of these considerations as you venture into the world of commercial investments will help you achieve your investment goals.