A summary of 6 areas to consider when getting into commercial real estate.
The idea of investing into commercial real estate is not new. Since the 1800s, it has been the number one investment choice and has helped many investors turn themselves into tycoons, according to Todd Tretsky of CRE-Finance LLC. Being a proven way for earning high returns, the consideration of investing into commercial real estate can be a wise choice to make; however, keeping a few factors in mind can help make the right decision.
1. Business Needs
Before investing into a commercial real estate property, it is important to understand and evaluate business needs. A business owner should have certain criteria and specifications in mind to make the investment work out for the business. As each business would have its set of unique needs, identifying these needs would be the first thing essential for making a profitable choice. Think on these lines, how many people need to be accommodated in the workspace? What is your target market?
The location of any property adds value to it and enhances its prospects. As a business owner or investor, choosing a prime location would allow business growth and compliment business profitability. Check out the neighboring businesses, security standards, and research well on the area before going ahead with the choice.
Investing into commercial real estate can be a strain on your liquidity and cost a significant amount of your savings or cash at hand. While making an investment is a great decision, keeping count on your finances and staying within budget is largely important for the investment to last and you to stay peaceful. Compare prices and make a reasonable choice. As prices vary from one area to another, the catch is to get a well-located property that is affordable to own.
As investors into commercial real estate view it as a source of passive income, regular cash distributions are bound to be generated through rent but the point to consider is that how much rent can the property reap? Determining the amount through estimations beforehand will be useful in managing expenses.
For investors who are acquiring commercial real estate for rent, calculations are still essential as you do not want the overhead costs to be a hurdle for your business growth. The deal is worth it if the amount being paid for rent is only about 30% of the overall business income, states the professionals at CRE-Finance LLC.
5. Professional Inspections
Investing into a commercial real estate property without having it inspected by a professional can turn out to be troublesome down the road. Make sure that you hire professional services and get a thorough inspection done to evaluate the true condition of the property, pay its right value, and do not face sudden and huge expenses that can put your investment into jeopardy.
6. City Government Permits
The last thing any investor would want to get stuck with is legal complications. As the city government needs to give you a permit to run your business in a certain area, getting a hang of these documents is essential to keep clean of costly mistakes when signing up for the contracts. Make sure the property is up to the legal code and would not be a cause of any hindrance.
Once you have checked on all these factors, you are good to go ahead with closing the deal and count on it for being a good commercial real estate investment.
If you have any questions regarding commercial real estate or are seeking financing, please reach out to Richard Tretsky at 212-257-7307 or Todd Tretsky at 212-257-7305 or visit us on the web at www.cre-finance.com.