Commercial Real Estate Investment


Commercial real estate investment has many benefits, such as extra cash flow, a large market of excellent and affordable properties, and bigger payoffs. However, making a successful real estate deal is more easily said than done. Many things should be kept in mind while considering buying or selling commercial property. Many sales fall off in between due to the lack of proper homework. Since these are challenging times for business, every step should be taken with complete precautions and preparation.

Getting started as a real estate investor

To get a successful commercial deal, first, you will have to jump into real estate investment. These are the points that should be kept in mind before making your move:

Plan and work accordingly

Please create a list of all your real estate investment plans and jot them down on paper. Those who have a clear vision of their goals have a better chance of succeeding than those who work by the instinct. Your goals could be anything ranging from the amount of money you intend to make from real estate investing at the end of each month to a particular number of properties you want to buy or sell. These goals should be measurable. Also, keep records of the progress being made.

Research, research, and more research

Before embarking on your journey as a realty investor, you need to do a complete study of the market where you want to invest. Instead of taking giant strides, take small steps by studying a particular area of a town or city, and concentrate only on that area. This way, you will get familiar with the trade tricks without getting too overwhelmed with the sheer expanse of the real estate market.

Plan your exit well in advance

All’s well that ends well; this idiom is perfectly suited for property investment. It would help if you had an exit plan ready for the property you are investing in even before purchasing it. Are you going to hold the property for the long-term, or do you intend to sell it quickly to make a nifty profit? What makes a successful real estate deal? To know that whether the deal you have made is a success or not, examine it on these five data points:

Cash Flow

Always measure how the property is going to perform in terms of cash flow in comparison with other stuff to have an idea of whether you have made a good deal or not. Many factors affect the property’s cash flow, such as the local rental market, interest rates, book profits and the amount of your first down payment.

Appreciation: This one is a little tricky since there are multiple factors involved. The experience will teach you to make the right purchases in the right neighborhoods. The timing of a real estate cycle is complicated and very risky due to the market’s speculative nature. The safe game is to invest for a moderate to a long-term period. (10-12 years).

Risk: Not many real estate agents consider this a decisive factor in their investment decisions. However, there is always a possibility that all your assumptions turn out wrong, and you are left with very few options. It helps to have a plan B in place for such times. Expect the best, but always be prepared for the worst.

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