Don’t be fooled by a pretty property: some of the most incredible-looking buildings are in fact the worst investments you can make. Commercial real estate investing is heavily dependent on the deal, the ROI and the specific terms. Check out these tips for successful commercial real estate investing:
- Be an investor rather than an accumulator. You should be making investments in order to produce an income or a profit. Period. Why buy a property that is not producing an income or profit? In this case, you’re just acquiring property, not making an investment.
- Every property has a lifetime. Don’t forget that over time, you have to spend money to maintain the building, from a new roof to an updated electrical system. Have a long-term plan in place to cover these repairs.
- Focus on one investment type at a time. Whether apartments, offices, land or retail, focus on one at a time so you can give it your undivided attention.
- Consider environmental problems. Hazardous waste problems are a big concern for property owners, as you are responsible for fixing them even if you weren’t the cause.
- Find a mentor to learn from their mistakes. Mentors save you from making big mistakes, connecting you with resources that you otherwise wouldn’t have known about.
- Find out if your assets are protected. Do everything you can in order to protect yourself against lawsuits.
- If you find yourself in a partnership deal, fund it with a non-recourse loan. Non-recourse is when you don’t personally guarantee the loan. This means you can be removed from the loan if the deal goes bad, and if the property fails it can’t be connected to you as a person.
Heed these tips to be a successful commercial real estate investor.