Investing in commercial real estate can be a great idea. It can offer a significant return on one’s investment. However, it takes time, experience, and patience. It is not a “get rich quick” idea.
Commercial real estate investing is attractive because it offers long leases and potentially large returns. It can guard against stock market volatility and it can provide a steady cash stream as the asset appreciates in value.
Types of Commercial Real Estate
There are four primary types of commercial real estate:
Multifamily dwellings
Office properties of different sizes (low-rise, mid-rise, high-rise, standard office buildings, and “office condos”)
Industrial properties
Retail locations
What Are The Challenges of Commercial Real Estate Investing?
There are six challenges found in commercial real estate investing. First, gaining knowledge about and experience in this complex endeavor. Second, qualifying for financing to secure a property. Third, finding properties that offer the best investment opportunities. Fourth finding a qualified real estate agent that will provide advice, real estate knowledge, and negotiation skills to help throughout the process. Fifth, managing a property once it is acquired. And sixth, handling vacancies to maximize revenues.
Helpful Guidance for New Commercial Real Estate Investors
Follow these tips to overcome normal challenges and achieve success.
Secure necessary funding upfront before signing a contract.
Conduct plenty of “due diligence” to make sure that the property will be a good investment. This includes conducting a complete physical inspection, making all legal inquiries, and conducting a financial review.
Make sure you understand how to protect yourself as an investor and how to protect your assets. Seek legal advice regarding the formation of your investment entity.
Understand the market including vacancy rates, rental prices, length of leases, and the competitive environment.
Develop a plan for leasing and property management.
Get advice from professionals.
Seek Expert Financing Assistance
Contact Capital Funding Source, based in Glenwood Springs, CO for customized funding solutions that will help your business grow beyond boundaries. We offer a wide variety of financing for small businesses.