Investments in commercial real estate provide a number of benefits to owners. By owning a commercial property, a business owner can save on the rental which otherwise he would be paying to run his business. Investors can benefit from rental income as well as capital gain on the property. People usually invest in commercial properties like industrial space, office space, retail space, multi-use properties, land and multi-family properties comprising of four or more units.
The main skill, however, is to know how to sift out the best properties from the rest and know what characterizes a great deal. Following are some strategies that may be useful while investing in a commercial property:
- Think Like A Professional: To be a successful commercial property investor, you have to think like a professional. Know the difference in the valuation of commercial property and residential property. You should be aware of the direct correlation between commercial property and its usable square footage. When dealing with commercial property the cash flow is higher e.g. the income from multi-family dwellings is higher than that of a single-family home. Another important distinction is that commercial property lease is usually of a longer duration than lease on single-family residences.
- Chalk Out A Plan Of Action: It is important to set parameters when investing in commercial property. This implies that you should be aware of how much you can afford to pay for the property and shop according to your budget. Tools like mortgage calculators are handy for coming up with nearly accurate estimates about how much you can spend.
- Learn How To Identify The Right Deal: To identify the right deal; pay attention to damages in the property, assess the extent to which repairs are required, stick to your financial goals, assess risks, etc.
- Get Familiar With Common Key Metrics: Be aware of the common key metrics used for assessing real estate. Examples of key metrics are net operating income, gross operating income, operating expenses, cap rate, net present value, capitalization of earnings, etc.
- Look For A Good Seller: Look for a seller who is trustworthy. It is advisable to research about the property and its seller prior to signing the deal. You should hire a real estate agent to provide professional guidance while going through the deal.
- Evaluate Properties: Before finalizing a commercial property, evaluate it thoroughly by studying its neighborhood, going through online listings of comparable property and so on.
- Polish Your Communication Skills: Apart from the strategies mentioned above, your communication skills have a huge role to play in the kind of relationship you establish with realtors or sellers.
John Reider Properties helps its clients in making commercial property investments in Killeen, TX. The team utilizes its experience and knowledge for the benefit of clients. For more information about commercial property investments in Killeen, call at (254) 699 – 8300. You can also visit 455 E. Central Texas Expwy Suite 101 Harker Heights, TX – 76548.