Get Sensible with These 5 Commercial Real Estate Investment Tips
Oct 04, 2021
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Commercial real estate has been a hot topic of alternative investment strategies for a while now. People are looking for ways to make passive income to help save for retirement or look for their next investment opportunity.But there is no such thing as a shortcut when it comes to finding the right deal. After March 2020, the impacts of the COVID-19 global pandemic had a heavy influence on both current and future commercial real estate investments.
We don’t fully know the extent of what the future of commercial real estate will be like once the pandemic finally ends, but we do know how we can prepare for future investment opportunities.
Here are five tips to help you make sensible decisions if you’re considering an alternative investment in commercial real estate.
Don’t Spread Yourself Too Thin
When starting out with commercial real estate, it’s important to learn the five main categories of real estate investments you can make.
- Multifamily
- Office
- Industrial
- Retail
- Hotels
Each one has subcategories, but overall it’s important to find your niche and stick with it. This means if you are going to invest in retail, really learn all of the ins and outs of retail properties before you try dabbling in hotels. They are two very different markets and require entirely different skill sets and areas of knowledge.
Look for People Who Are Motivated to Sell
If you’re looking for the best deal for your investment, you want to talk to people who are drastically motivated to sell. The more someone is eager to sell their property, the more they are willing to negotiate.
You might be thinking that if they are willing and eager to sell, then perhaps there is something wrong with the place. On the contrary, there are several reasons why someone may be looking to sell, which means there is always an incredible deal somewhere in the market. You just have to be patient and do your due diligence while looking for the best deal possible.
Do Your Research About the History of the Property Beforehand
It might seem like an obvious statement to do your research before making the investment, and perhaps to some degree, you have. But what do you know about the history of the property itself?
Was it previously remodeled without proper permits that could lead to future issues? What environmental hazards could potentially impact the property? You want to look for anything that could be remotely out of place that could dramatically change whether or not your investment will succeed.
Get Asset Protection for Your Property
Being the owner of a property means you are more vulnerable to risks than someone who is renting. And just as any business owner would do for their company, an owner of any type of commercial property will want to obtain asset protection.
Yes, we said business because as a commercial real estate investor, you are also now a business owner. You’ll want to protect yourself from being held liable if something happens with tenants, guests, or residents of your property.
You can also have added protection by starting your own LLC or corporation with the state. This helps you to separate your business and personal assets to protect yourself from any legal issues your business property may experience.
Talk to a Professional in the Business
There are several people who have already paved the way towards a successful alternative investment strategy such as this. Professionals in commercial real estate can provide you with insight you don’t have.
The fact is that just like any other business, commercial real estate has its own set of cycles. The experts are the ones who are paid to understand these cycles based on proper analysis.
Don’t be afraid to ask for help and guidance from the ones who are working in the industry day in and day out.