Commercial real estate is appealing; it can offer rental income while accruing value and providing a safe harbor for capital gains. It’s especially appealing in a buyer’s market, but like any major investment opportunity, there are risks associated with the potential rewards. Below are five commercial real estate pitfalls to avoid when going through the real estate process.
Buying property in a wrong or bad location.
You may have done a lot of commercial property research on your own, there’s still a lot about commercial real estate that you won’t find on the internet. As industry experts, Matanky Realty Group has completed hundreds of transactions across many types of assets. As your trusted advisor, we use that experience to help you.
By listening to advice from a licensed commercial real estate broker, you’ll receive valuable information and support during the investment process alongside a deeper understanding of market history and trends.
Ignoring good agent advice.
One of the first rules of real estate is location, location, location. Since location is everything, pay attention to the commercial property’s surrounding neighborhood to calculate the growth expectations in comparison to similar neighborhoods. Researching population demographics (people moving in and out of the area), neighboring businesses and daily traffic counts will be valuable information in predicting the property’s worth in the future.
By listening to advice from commercial you’ll get valuable information and support during the investment process alongside a deeper understanding of market history and trends.
Disregarding professional inspectors.
A commercial space may seem to hit all your criteria, but you should always have a professional inspector review the location prior to signing. Some investors think they can save some money by not hiring an inspector, but in reality, this step can save you a lot of money in the long run. Inspectors can identify potential problems and can offer estimates on how much has to be spent finding a solution.
Acquiring a commercial property requires a larger amount of capital up front versus a residential property. There are also several other fees associated with a commercial purchase in addition to the price tag, which is why it’s important to bring in a reputable general contractor early on. This is especially true after the purchase. For example, the amount of time and money it will take to rehab a commercial property can cost more than the sticker price, and as the owner, you’re fully responsible for the cost
Planning as you go.
Real estate is more than a transaction; it’s an investment strategy. It’s important to have a plan in mind that includes an investment model, strategies for property management expenses and additional costs, and any other requirements you may have. Only after you have a plan should you look for a commercial property.
We understand that there’s a lot that goes into purchasing a commercial property, beyond the investment itself. That’s why the experts at Matanky Realty Group are here to help throughout every asset’s lifecycle – not just through the close date. By helping you navigate through each deal, our team ensures you can avoid these common pitfalls. Contact us to discuss how we can help you achieve your investment goals.