If you’ve decided to invest in commercial real estate for the first time, congratulations! This is an extremely exciting decision.
Investing in a commercial property can be a highly profitable venture. However, commercial real estate is significantly different from residential real estate, and there are a few things you need to know before you can dive in.
Ask yourself the following questions to determine if you are truly ready to invest in commercial real estate and step into this world.
What is your knowledge of the market?
You should never go in to any business venture blindly, no matter what it is. Always do a fair share of market research about the market you are planning on investing in and the types of businesses you will be working with. Even if you know a lot about the industry already, it’s important to keep up with new developments and news. If you’re purchasing an economic development property, this will be a major factor for you as you will want to know about the local economy that you will be involved in.
How well do you know your location?
Assuming that you’ve already decided on a location, you want to make sure that you understand the demographics and market trends within that area. Talk to local brokers and commercial real estate agents or appraisers. They know the business developments in the area better than most and can tell you the truth about what the economy looks like and the types of businesses that succeed there.
Are you prepared for long wait times?
In the world of commercial real estate, processes and procedures can take significantly longer than in the residential world. It can take months to obtain permits, have proposals approved, or arrange proper zoning. Therefore, make sure you are prepared for a potentially long wait and know that changes aren’t going to happen overnight. Understanding this and being aware of it will help take some of the stress off when you are trying to get things done.
What type of businesses are you going to be renting to?
When it comes to commercial real estate for sale, it’s important to have your long-term future mapped out. This includes considering the type of tenants you’ll work with. Take a look at the type of business you’re renting to. If it seems like it’s not sustainable, it may not be worthwhile on your end. Now, this doesn’t mean you shouldn’t rent to these businesses- it just means you should be prepared and have the correct paperwork in place. For example, make sure you have a good insurance policy set up.
So, are you really ready to invest?
If you answered these questions with confidence, it’s time to start looking for your new investment property.
There are many great opportunities in Niagara right now. The area is growing and developing rapidly, with more residential and commercial projects underway than ever. Get in touch with me and I’ll help you find the perfect investment property for your own needs and goals.