Looking to expand your business? Moving to a new city? Moving from a home-based business into a brick-and-mortar store? If you answered yes to any of the above, then investing in a new commercial property through buying or renting can help you during times of transition and boost your own portfolio. Here are four tips on how to approach investing in your first commercial property:
Get Help from the Best
We all know that we need help from time to time when embarking on something we know nothing about. Your best bet is to learn from the best. When it comes to commercial property, choose a real estate investment firm or company that genuinely knows the landscape of where you want to form your base of operations. They will help you find places within your budget and help you determine if buying or renting is the right move for you. Choose a company that gives you an honest and personal approach that will show you the best properties at the best price.
Research Your Location
Knowing why you want to buy your property is a key factor in choosing the right location. Are you buying because you want to create a base of operations or do you want to create a complete investment property? You can also choose to do both. You can have a property that houses your own business while renting areas to other proprietors to generate income for you.
If you want to capitalize on your renting capacity, make sure you invest in a location that deals in high amounts of marketing traffic. Check on the local taxes that you will be paying in this specific location and what building restrictions there might be on this property to help you make a more informed decision.
Let Someone Else Invest for You
There are two options when it comes to letting go of the reigns and being a passive partner in commercial real estate investment. The first option is syndication. This process involves bringing money together from several investors to buy a property that you can’t afford on your own. This makes you a passive investor that invests for a return on said investment. This can work when several parties or even a crowdfunding campaign has a particular goal in mind but cannot realize it themselves.
The second option is to invest via a Real Estate Investment Trust. The trust basically buys large commercial properties and sells shares to investors. You become a type of shareholder in the investment as if the property were actual stock. This can all be done from the comfort of your home computer, as well.
One factor that can often cause a property investment to fail is the miscalculation of recurring monthly expenses that you must pay for the continued operation of the property. Always do due diligence on any property you are wanting to acquire by being present for all inspections, have a rent survey done, and develop good relationships with your contractors. Make sure you adequately understand the vacancies, expenses, landlord laws, and marketing trends at the location.
Always make sure you have trusted advisors on your side that are willing to do the hard work by asking the hard questions of you and your investors. Never compromise and always do your research before investing in a commercial property.