Investing in commercial property is an excellent career for those who are already experienced with the world of real estate investment. For someone who is just starting in real estate, it’s not the best place to jump in. However, if you’re experienced with real estate and feel that adding some commercial properties to your portfolio would be beneficial, here are some dos and don’ts to consider.
Do have a plan
It’s necessary to have a plan before you make any investment decision. A proper plan gives you the tools to recognize the perfect property when you happen upon it. A lot of commercial investors will purchase a property because it seems like a good deal and then attempt to fit it into their plan. An experienced investor will have a plan and focus on long-term strategy, capital growth, risk mitigation and cash flow.
Don’t buy into the “get rich quick” hype
A lot of people get into property investment because they wrongly believe that purchasing one property will automatically make them millionaires. Any rental property is only as good as tenant and lease on the property. It’s possible to move in a tenant and have them quickly go into liquidation or receivership, or the property sits vacant for months on end. As with anything, commercial real estate takes time and effort to be successful.
Don’t try to do it alone
You may think real estate is a one-person job, but you need a whole team of people to be successful. There will be many things you may not know about owning property, which is why you rely on a team to fill in those knowledge gaps. The proper team will help you to set a clear strategy, choose the right property at the right price with the right conditions, conduct detailed research, and manage the property.
Do know your property and the market inside out
You should always be cautious when purchasing an investment property. Being well-informed will help keep you from making rookie mistakes that will end up costing you. All business aspects require homework and training, and property investment is no exception. Before purchasing a property, research both the market and the property itself. Know what type of businesses are in the area, the average price of rentals and the tenant history of the property. All of these factors will allow you to make an informed decision on whether or not the property is worth the cost.