Now that you’ve made a decision to invest your money in the commercial real estate, one of the primary questions you need to answer is “How to make the right decision while buying a property?”
It is no myth that in the world of real estate, there are people who more often deceive you than help you. And then there are people who pretend like they’re on your side, but in reality, they are waiting for their sun to shine!
Well, oury intention is not to scare you. These are the practical things that you need to know before you enter the game.
Only if you know about the darker side of real estate investment, you will be able to take all precautions needed to stay out of trouble.
But first things first! Congratulations on making the decision of investing your money in real estate! With the right tricks and tips, you’ll soon see that money does grow on trees! But getting the right tips and tricks, that’s where the challenge lies!
Don’t worry! We’ve got you covered! We bring you top tips that’ll help you in making a right decision for your commercial real estate investment! After all, real estate investment is all about right decisions made at right times! So here we go! Hang in tight there!
1) Be all eyes on the potential infrastructural development of the area
One of the best ways to know if the area where you choose to invest is going to appreciate in value or not in the near future, is to look at the surrounding potential development in the infrastructure.
Has your area got a hospital getting constructed? Do you see any shopping malls built?
Any plans made to construct roads? Public parks construction is likely to be started in sometime?
If yes, this area will most probably improve within a couple of years and your real estate will definitely appreciate in value. Especially if there’s an educational institution that’s being built or is proposed to be built, you can expect good hikes in your property.
So this property is good bait for you! Be watchful of the infrastructural developments that are happening around your area.
2) Gain market knowledge
One of the stupidest decision people make while investing in real estate property is to just rely on someone else’s decision. Yes there are friends and family and neighbours who will be willing to help you out!
But how wise is it to invest your money on a property based on the personal judgment of other people? Even the biggest players in this industry have had their share of losses as they made a wrong move.
So isn’t it always better to do your part of research and homework? Never ever make the stupid silly decision of totally relying on someone else’s decision. Gain the market knowledge; know the trends, current market rates, mortgage rates and so on.
3) Get to know the neighborhood
Gaining market knowledge wouldn’t suffice. It’s always suggested to also know the surrounding neighborhood well. Take an evening stroll in the location and you’ll get a fair idea about the local pricing of the properties in that area.
You can scratch a conversation with a couple of people and get insights on the future infrastructural development of the area. This way you’ll know if you’re getting the right deal for your property or not.
In many cases, just because you have missed out on this step, there are high chances that you’ll simply end up paying more for your property.
So, take no risk! An evening stroll for a couple of days is all it takes to get deeper and closer insights about the location of your property.
4) Make a right decision on your commercial real estate funding
Commercial real estate loans business is increasing today and there has to be a reason for it, right? Time has proven that it’s always a great decision to fund the commercial real estate by taking a commercial real estate loan.
Loans have their own set of advantages and disadvantages but this particular mode of funding has been working wonders for beginners as well as players in the world of real estate industry.
With the help of a good commercial property loan broker, you’ll be able to finance commercial real estate loan at good interest rates. With increasing number of companies that provide this facility, there is increasing number of options and variations which might work our best for you.
Also, read about How To Refinance Your Commercial Real Estate Property – An Expert’s Advice!
5) Be a sport and have your game plan!
There’s a reason people call the business of real estate a game! And there’s a reason why successfully people in this industry are referred to as players! Yes! Investment in real estate property is no different than a game!
There are ups and then there are downs! There are humps and then there are dumps! There’s thick and there’s thin! There’s a right decision and a wrong step! There’s luck and there’s opportunity!
So just like you have a game strategy while playing a game, you need to have a game plan for your real estate investment too. Set your real estate goals.
Define a time frame to achieve that goal. Don’t keep running in the playground without knowing when you need to hit the goal. Know your goals and define them well in advance.
Ensure that your goals are realistic as well as achievable! When you’ve achieved it, pat your back and when you haven’t, see and analyze about what could have gone wrong!
6) Become a member of local investors club
There are hundreds of local investment clubs around you. It’s always a wise choice to become a member of these clubs. Their meetings will be eye-openers for you in a lot of ways and you’ll get to learn a lot.
You can have interactions with those members who are also investors like you. You’ll get to hear stories from people who are new to the industry and from those who’ve got decades of experiences!
That’s the best part of being humans right? We learn from the mistakes made by our fellow beings?
You will gain insights on commercial real estate funding. Make notes of what works and what doesn’t in real estate while you attend these meetings. This will help you immensely in making that right decision of making an investment in real estate!
7) Look out for the low tax properties
Low tax properties are always in high demand. The reason is quite simple and self-explanatory. Low tax properties will attract more buyers than any other types of properties simply because the payment of tax is much lesser.
So there are always good buyers and thus these properties are in high demand. If you’ve bought a low tax property and hold it for a couple of months or years until the value is appreciated, you’ll definitely be able to churn out huge profits when you found a good buyer!
The best part is that these buyers will most probably be willing to pay you more as it’s just a onetime huge investment for them and they’ll be saving money in the long run due to low tax property reason!
So if you find a low tax property, getting your hands on it is a great idea!
8) Always pre-plan the exit strategy
Real estate business is a game but it’s not a child’s play! As much important it is to enter the business at right time, so is the time when you’re exiting the business. You need to know well in advance about the time when you’ll be exiting from the business.
Holding the real estate property for really long periods of time just in the hopes that it’ll one day shower profits on you as it’s appreciating everyday will only incur you losses. You must know when you need to sell your property and make profits.
Because there are times when you must sell off the property! In other words, holding the property any longer will only depreciate the value of the property due to whatsoever reasons.
So even before purchasing the property, get a clear picture on until when you’re willing to hold the property. What’s the maximum time until when you’re going to wait to see if your property is going to increase in value?
Define the answers to these questions crisply and stick to it! When it’s time to exit, you got to exit! Make that the game plan!
They were some of the tips that’ll help you in making a right decision for investing in your commercial real estate property!
Remember that it’s not important if you’re taking help of 10 people or 20 people while purchasing your property!
What matters more is your own instincts and hitches that need to be developed by your homework on all the above-mentioned factors. Everyone can suggest you! Anyone can advise you! But only you can make the right decision for you!
So only you can make the deal or break the deal! Having said that, happy homework time and have a fun filled experience buying your commercial real estate property!