All You Need to Know About Commercial Real Estate Investment.
June 28, 2016 by Staff
Filed under Money/Business, Weekly Columns
(Akiit.com) Whether you have any experience in property investment or not, commercial real estate offers the chance to make money. In many ways, it can be much better than heading straight for residential real estate investment options. But there are some secrets of success that you will need to know before you get started. The key advice below will allow you to hit the ground running as an investor.
A Plan of Action is Key
You need to have a plan before you actually delve into this form of investing. In many ways, it can be quite complicated and difficult. You have to know what you intend to do and how it will make mon
ey for you. It’s something that should be applied both to your buying strategy, and your selling strategy. So, make sure that you draw up a solid plan of action. What this plan includes is entirely up to you. You might want to buy up premises in a particular location and then sell them when the value rises. Or you might want to create a long-term strategy that involves renting to business tenants.
You Can Learn and Gain a Lot from the Pros
You can learn a lot from people who have been there and done it before. They are the ones who can point you in the right direction and provide the tips that could make you money. So, get to know people who have done this kind of thing before and see what they have to say. You can also gain a lot from using companies that specialize in commercial real estate investment. This is especially true if you are new to this world. 1031 exchange properties are good as potential investments. And a lot of the hard work and diligence is done before you invest.
There are Different Metrics
You need to have a firm grasp on the different metrics that are used in the commercial investment industry. If you don’t know the difference between net operating income and a cap rate, then you won’t get very far. A net operating income takes the income you make from premises in the first year and then takes away the operating costs. This gives you a net operating income that you can monitor year on year if you’re renting out the premises. And a cap rate is used to monitor the property’s capitalization rate, and it’s future income generating prospects.
Eager Sellers Are the Best
If a seller really wants to sell, then you are in a very strong position as the buyers. This is true in all kinds of property investment, but especially in commercial real estate. When they are motivated to sell, they’ll be willing to sell below market value. And that means you will get a bargain and have a better chance of making money. When a business goes bust or moves to a new location, the owners of the real estate often want to move fast. So, you need to do your research and be ready to pounce when a seller is looking for a quick and easy sale.
Staff Writer; Ted Williams