Investing in commercial real estate can be a great business move whether it’s for your own business or for rental income. It is often a considerable investment, so with that in mind you might want to read a few tips for investing before making this financial commitment. Here are my top 3 tips for investing in commercial real estate:
1. Get the Experts in
Generally commercial real estate is more expensive than residential real estate, because it’s often in a prime location and can be considerably larger than a home. With a greater spend, there’s a greater risk and that’s why the first point is getting the experts in. You’re going to want to have a team of people help you ensure this is the right financial decision for your investment. I would start with someone to do a properly appraisal and to look for any issues that might cost you money. This can be a relatively expensive process, but not as expensive as not doing it and having thousands, or tens of thousands, of dollars of problems to fix. You’re also going to want to get a commercial real estate lawyer on board to help draft up all of the documents, for both buying and for renting if you want to go down that route. I suggest finding lawyers that specialise in this process, such as Kazmilaw.com.
2. Have a Thorough and Realistic Plan of Action
How much do you plan to invest? What kind of return do you see yourself getting each month and over the course of the year? How will you finance your property? These are all big questions, and with a bigger investment the stakes are quite simply higher. You might want to look at what you can afford to invest, whether you’ll need a mortgage and for how much, and maybe even consider a financial advisor to sit down and help you hash out the numbers. Consider any tax obligations you’ll have, both when buying the property and on your rental income. Having the most realistic plan of action possible will help ensure you make the right choice with your funds.
3. Pay Attention to the Location & Condition
They always say “location, location, location” when referring to a property and for a commercial property this still holds true. The location will impact the rental value majorly – if the property is in a high traffic area, then you’re likely to have to pay more, but also you’re probably going to be able to charge more rent each month. This will also depend on the type of property, too, if the property is likely to be used as a factory for example, the location will matter less than a property that will be used as a store front. You’re also going to want to think about the condition of the building, how much will it cost to make it attractive to prospective renters? Will you need to invest in some flexible stainless steel solar pipes like these https://hydrosolar.ca/collections/solar-stainless-steel-pipes to get it up to standard? It’s important to understand what costs will be associated with it before buying.
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