When you invest in commercial real estate, your property can be a gold mine or a money pit. Every piece of property has the potential to go either way. The deciding factor is how much you learn about commercial real estate and how well you prepare yourself for the market. Here are a few important considerations:
Making connections with investors and lenders can be your path to success. These kind of relationships are very valuable. Most likely you don’t have millions of dollars in cash to invest in a large commercial property. However, if you have a large network of investors, you might be able to find someone who will fund you, and you make a profit together.
You can use the cash-on-cash formula to determine the amount needed for the initial investment. This approach is most commonly used by investors who are dependent upon financing activities to raise the cash needed to purchase the property; use it to compare the Year One performance of competitive properties.
Be sure to include a right to terminate the agreement in so many days written notice with your broker in your written agreement. This way you will be able to terminate the relationship fast if you find that your broker is not doing a good enough job for you.
If you are taking out a big loan to purchase commercial real estate, your best bet is to go big. Looking for the biggest return on your investment may require a larger investment, but that comes with the territory when shopping for commercial lenders real estate. Bigger properties will pay off better in the end.
Make sure that before you engage in the purchase of real estate, to meet with the architect for your company. An architect will give you a better idea of the blueprint for the buildings and structures that you will need to build on the new piece of real estate that you wish to purchase. This will help to facilitate your overall decision.
Do not try to bribe your real estate agent into scheduling more showings for you. Not only is this totally unethical and offensive to any reputable agent, but there is still no guarantee that your property will sell any faster even though it was shown to buyers a lot more.
Hopefully, these suggestions will help you get the best out of the effort that you put into commercial real estate investment. The overall real estate market does dictate how much money is out there, but your share of it depends on how much you know and how hard you work.