Are you looking to invest in commercial real estate? If so, congratulations! There are many benefits to investing in commercial real estate, including increased earning potential, consistent cash flow through tenant lease, and having a tangible asset as your investment. You can read about our top three reasons to invest in commercial real estate here.

Investing in commercial real estate can seem like a daunting process, so we put together 5 things to consider when looking to invest in commercial real estate.

Understand that Commercial Real Estate is valued differently than other properties

Generating income from commercial real estate is tied directly to the amount of usable square feet. Therefore, you will have greater earning potential from multi-unit properties, whether they are multi-family rentals, retail space, or office buildings.

Additionally, location is fundamental to the success of your investment. You’ll need to fill vacancies, so it’s important to make sure your property is desirable to tenants.

Establish goals for your investment and understand the risks involved

Are you looking to diversify your investment portfolio? Or perhaps you want to save for retirement, or have a steady source of monthly income? Whatever your goal, when making the decision to invest in commercial real estate, it’s critical to understand your goals and what kind of burden – financially and energetically – you are able to take on. Set reasonable timelines for achieving these goals, and be clear about the risks you are willing to take on.

Get clear on what is going to help you reach your goals

Once you have your goals set and an understanding of what you can handle, think about the type of property that will get you there – multifamily, retail or office space. Consider how much work you are willing and able to put into a property, what skills and knowledge you can lend to the management of it, and what you will need to contract out. Will you need a property manager? If your time and financial capacity is limited, you can also consider partnering with someone else on your property to share the burden and responsibility.

Take your time and visit many properties

When investing in commercial real estate, whether it’s your first property or one of many you already have in your portfolio, it’s crucial to do your research and tour as many properties as possible. Consider price, location, property condition and allowed uses. Also, make sure you understand what taxes there may be, what replacements/repairs/upgrades need to be made on the property, and what average monthly rent is generated. Finally, consider the location of each property and what is happening there. Is it growing, changing? Is it becoming more populated, or are people leaving to other parts of town? Again, we cannot emphasize enough how important location is when selecting the property in which you want to invest.

Enlist the help of experienced professionals

The process of investing in commercial real estate for the first time can be daunting, and there are many nuances and subtleties you will need to be aware of. That is why it is incredibly beneficial to have a roster of professionals to rely on to help guide you through the process. To start, you’ll want to have a commercial real estate agent, a commercial real estate lawyer, an accountant and a mortgage broker. You may need additional resources, such as a tax accountant, engineer, environmental specialist, etc.

If you are thinking about growing your money by investing in commercial real estate, please contact me. I will work with you to find the perfect property to begin or continue your journey of owning a piece of commercial real estate!