Committing your time and money to a commercial real estate investment property is a major decision, and for a first-time investor can seem particularly daunting. With so many variables and risk factors to keep in mind, asking the right questions can ensure that you’re taking on a property that will serve your needs and goals the best.
Before Investing in Commercial Real Estate…
First, you’ll want to evaluate your intentions and desires when it comes to investing in commercial real estate. These questions will help not only narrow your search and determine the budget range you should be looking in but will clarify your overall vision for the investment process going forward.
1. How Comfortable Are You With Risk?
This simple question will be hugely important as you’re deciding where and what type of property you’ll invest in. If you’re okay accepting some level of risk, you may be comfortable investing in a more “up and coming” area, whereas if you’d prefer to play it safe, you’ll want to look for more established areas. Similarly, a risk-averse investor may want to consider a more “turn-key” property, whereas if you are excited about potential gain and associated risk, a “fixer-upper” or a property that needs some renovation or remodeling might be a better option with more room for increased value down the line.
2. Are You Looking for a Property to Increase Cash-Flow, or to Appreciate in the Long Term?
Essentially, are you hoping to rent out the property regularly to increase your total money coming in each month, or are you hoping to acquire a property now and resell it at a higher cost later? Each is a valid strategy to make the most of a commercial investment, but it’s important to understand which approach you’ll be taking so that your choice of property is in alignment.
3. What Value do I Bring to the Table as a Commercial Investor?
If you’re looking to make an impact in the world of commercial real estate, it’s important to understand what you have to offer and how you are uniquely suited to build a business around your investment properties. Maybe you can purchase properties in cash, allowing for greater negotiating power and better profit margins. Or maybe you’re highly connected and able to fill a space quickly once you obtain it. Perhaps you can move quickly through the commercial real estate process and make sound, snap decisions.
Whatever it is, you must have a solid handle on what you bring to the table before you ever step foot in a prospective investment property. Taking the extra time to consider your competitive advantage will support your bottom line and your success moving forward as a commercial investor.
Getting Started with Commercial Real Estate Investing
Regardless of your level of experience with commercial real estate investing or the number of properties you own, these essential questions are an excellent litmus test for your business. Keep in mind that the answers may shift over time as the market changes and as your financial and investment goals change, so it’s a good idea to reconsider these three questions from time to time and keep a firm handle on your overall goals and strategy.
The best way to determine the right commercial real estate approach and ensure your investment is the best one for you is to work with a team that knows the commercial real estate market in your area inside and out. If you’re interested in commercial real estate investing in Virginia, contact our team at Coldwell Banker Elite to discuss and strategize for your future commercial property investing. With many years in the local commercial real estate space under our belt, our real estate professionals can take your goals and match them with the ideal investment strategy in the area. Reach out today to get started!