Are you considering an investment in commercial property?
It is, indeed, an awesome opportunity. However, this opportunity is so much more than a paycheck. What will lead to a great ROI? If you are able to focus on components that will lead to a significant return on investment, there is a higher chance of success.
It is very important to make sure that the property stays in shape as the property could be sold in the future. Will a new roof ever be needed for the property? What about regular repairs and maintenance? These are things to consider and prioritize to ensure that your property stays in shape as an investor.
Commercial Real Estate Appraisal: What You Should Know About Investing
First, you need to develop an understanding of the market and the product you are investing in. Location is important too.
Learn the difference between the cost of the physical building (the bricks, mortar, etc.) compared to the investment potential. When the building is vacant, how will you determine what can be charged to make up for this vacancy. If the cost per square foot is higher than the value when a new tenant arrives, you’ll also have to take this into account.
Commercial Real Estate Appraisal: You’re a Landlord Now
This also means you’re a landlord. Tenants are responsible for the property but most of the time, investors will be responsible to maintain the property. It’s important to realize that from the very beginning. This isn’t passive income where you’ll just receive a check monthly. As an investor, you’ll need to maintain responsibility to oversee the property.
Commercial Real Estate Appraisal: Where Should You Start?
It’s important to seek out a real estate professional in order to discover the opportunities for investment. There are many things to take into consideration. Different areas could have different opportunities so it’s important to do your research on the opportunities to ensure a solid ROI. Develop your own niche.
Do you want to own an office space, a strip mall, land, retail, etc.? Once you decide your niche, develop a deeper understanding of that property and the details that could come with the opportunity offered in each category. Learn to be a master of the field, don’t spread yourself too thin in each niche.
This is why it’s important to consult with a real estate practitioner. They have the knowledge, the expertise, the experience, and the connection.
How Long Will It Take to See Your ROI?
If you invest wisely, you could see a return in your investment within the first year. There are many conditions that depend on this. It depends on the market, recession, etc.
Who Should You Work With?
If you’re investing for the first time, you may want to consult an attorney. An attorney will be able to show you whether or not the property is set up correctly. A real estate practitioner would also be a solid investment and start as previously discussed.
An accountant would also be a great professional to work with. Connect with plumbers, electricians, roofers, etc. to make sure that your property is always maintained and appealing to tenants.
Always do your research on tenants as well. It’s important to notice their financial health in case they have a financial issue that could set them back in fulfilling their contract or renewing their contract.
Stay ahead of lease dates and offer different options for renewal. As mentioned before, this isn’t passive income where you can just accept a monthly paycheck. You’ll have to stay on top of several things but with the right connections and investments, you could experience a significant return on investment.
Real Estate Matrix is of the Southeast’s premier commercial valuation firms and has participated in the valuation of billions of dollars in real property assets.
If you have interest in having a business valuation performed you can contact Real Estate Matrix at (877) 453-0221 or click here to fill out our form and we will get back in touch with you as soon as we can.