If you’re investing into commercial property, here are the things you should consider. Whether you are a first-time investor or experienced, taking these steps are important when evaluating whether or not a property is right for you.
1) Understand the market
Take a look at the competition around you. What is the market like? What are the risks? How successful are other investors in the area? How will your property differentiate itself from the competition?
These are all questions you should consider when looking at a commercial investment. From a financial standpoint, you should look at how soon you would break even and, your potential for profits and losses. Take a look at what other potential tenants are paying in the area. You’ll want to see if all those factors fit within your financial and investment goals. Doing this will help you determine what type of property you should invest in.
2) Evaluate your finances and financing options
You’ll want to get in touch with a lender, to get an idea of your budget. Talk to a loan specialist about all your financing options. Explore getting additional investors if needed, or even getting a loan from the seller. Take a look at all the financing possibilities and see what makes the most sense for you.
3) Consider a partnership
After you’ve looked at your financing options, consider whether or not you’ll need a partner, or maybe you already have a partner. A partnership is beneficial in many ways but can also be risky. You’ll want to be sure that you fully trust your business partners. Also, make sure that you share the same financial goals and that you have the same vision. You’ll want to make sure that your partner is as committed as you are.
4) Know what you’re looking for
How big of a commitment are you looking for? Do you want a smaller stand-alone property, a store-front plaza or a high rise? What type of tenants do you want to work with? What types of properties are within your budget?
Now that you’ve considered the market and looked at your financing options, take a look at what’s on the market and see which types of properties are going to work best for you.
5) Make sure you check with the city to get all approvals necessary
You don’t want to forget this important step. You’ll need to check with the city, to get all the proper permits, licensing and the go-ahead to proceed with your project. Be aware because this process can take a bit of time. You’ll want to account for any time delays, for your overall project.
6) Be ready for the upkeep
Take a look at the type of commitment each potential investment will take. Investing into commercial property is a big job and will require upkeep. Be ready for repairs and renovations that may come up. Make sure you keep your eye out for the trends in the market and stay competitive.