Investing in commercial real estate is a timeless endeavor that many enthusiasts keep an eye out for, especially if you want to build an impressive portfolio. Moreover, it proves to be a lucrative investment, provided you take the right steps.
There’s a big difference between buying residential and commercial properties since the former is a one-time investment, and the latter is more demanding in terms of the steps you should take as an investor.
However, with greater risks come greater rewards, and to ensure you have a lucrative experience with purchasing commercial real estate, we’ve outlined some things you need to keep in mind.
Real estate 101: Location
You don’t have to be a pro in real estate to know and understand that location is everything. Some of the factors that contribute to making an ideal location are vacancy rates below 5%. This means that when you assess supply and demand, you can be assured that tenants are less likely to move out frequently, making sure that demand for the area stays optimal. More on the dynamics between supply and demand later.
Quality of real estate
It’s essential that you figure out why you’re investing and the kind of property you’re interested in. Commercial properties span from office spaces, industrial complexes, retail stores and even apartment houses.
That being said, assessing for quality is crucial because you might have two buildings that are in the location you approve of, but one that aligns with your objective for investing.
Buildings with better architectural structure and amenities like elevators and better views are more attractive to tenants but if you want an office space, you will be motivated by other factors.
Look out for sustained demand
Commercial real estate is more interested in targeting specific groups of people. This means that more often than not you’re likely to run into saturated markets even if the demand seems to be high.
This is because some areas might see a wave of development which means that you need to think about the long term returns and improving the potential for capital growth before you invest. This is why it’s crucial to consult with a real estate expert who is wary of local market trends before proceeding with the investment.
Calculate the risks
Pan out the worst case scenario to ensure you have a plan in place for mitigating risks. This includes making sure the contracts are backed by assets with value and you obtain verifiable guarantees beforehand. Reach out to a professional for help to ensure you make a sound investment.
Macomb Commercial Real Estate is a commercial real estate broker Macomb County that offers real estate services to buyers, sellers, landlords, and tenants. Some of our distinguished services include landlord and leasing, tenant, buyer and seller representation, building evaluations and commercial real estate consultations. We make your search for an industrial building, retail strip center and investment office in Macomb County, Michigan easier and more hassle free.
Get in touch with us for a free consultation.
