Commercial real estate can be an attractive investment. If you’ve invested in residential real estate before, commercial real estate could be a great next step. However, before you dive in, there are some things you need to be aware of. Here are five tips for investing in commercial real estate!
1. Be patient; the process is longer
Everything from acquiring and renovating the properties to getting permits and finding tenants is a matter of months or years, rather than days or weeks like residential management can be. However, once you get through that upfront time investment, leases are usually longer as well, so there can be less ongoing work.
2. Consider the context of location
What kinds of businesses populate the area where you’re looking to buy? What local engineering and environmental laws do you need to consider? Especially if you’re not native to the area, it can be helpful to find a broker who is so they can help guide you through these considerations.
3. Be conscious of the types of tenant businesses the commercial real estate property will attract
For instance, restaurants and bars are businesses with high failure rates, so maybe avoid that type of property. Other businesses like banks and certain types of retailers are migrating online, so they might not be sustainable tenants either.
4. Prepare for a hands-on role
Commercial real estate isn’t a “buy it and forget it” kind of investment. The best commercial investors are actively involved in their property’s success. Monitor things on the small scale (individual tenants) and the large scale (economic trends, etc).
5. Know how you’ll handle the financing
Most real estate investors aren’t going to pay for the entire property up-front, of course, so where will you acquire the initial and ongoing capital to manage expenses? Line up a business loan or partners so you’ll be ready when you find your perfect property.
Contact Vankeith Commercial Capital to explore options for financing your commercial real estate investment business today!