If you're wondering if investing in commercial real estate property is a good idea, make sure you do your homework. Some people would not dream of going into this market and if you don't have a heap of ambition, it may not be for you either.
A lot of research and time go into finding the right property. You must weigh the purchase price against the potential value of the property. Inspections, negotiations, financing, possible plans for development or remodeling and marketing are also considerations. Do your homework before jumping in with both feet.
How can you make an informed decision?
Research other properties in the area and do a comparison. See if they will be competing in the rent or price you plan to get for your potential investment. Don't leave out new construction in the comparison. Also, pay attention to the growth and occupancy rates in the area to see if it will sustain the property over time.
How can you best protect yourself from losing time and money?
Compare what it will cost to manage the property yourself or hire a property manager. Consider things such as maintenance, marketing, showing the property and other management duties. Calculate the time and costs so you can make the most beneficial decision.
Should you go into a partnership for your commercial real estate investments?
Partnerships will allow you to take on larger investments, but you need to keep in mind that multiple investors mean multiple and possibly differing opinions on things such as when to sell, how much to charge and so on. A partnership may not be a bad idea, but if you go this route, you need to have a legal contract that includes a detailed plan for each property. Nothing should be left to dispute.
It is also important to have a good attorney for your commercial property closing. Legal issues can be avoided by having your attorney involved in all aspects of the investment deal.
Source: Forbes.com, "These Four Common Commercial Real Estate Investing Mistakes," Michael Episcope, accessed March 16, 2018