Investing in commercial real estate is a lucrative way to make a living. When done wisely, it can help you reap a sizable income and also provide premium space for tenants to live or run their business. If you are interested in investing in commercial real estate, you will likely run into the challenge of finding a promising property in which to invest. Make sure you can check off these items before you decide on a property.
Location does matter, and one must look at the context of a commercial real estate to assess it. It is best to choose an area that has plans or potential for development or an established, diverse economy on which to build. It can help to look at the crime rates as well, as this can inform what kind of tenants you may have and how safe their businesses will be.
Check out the structure of the actual property to see how well it flows and how likable it will be or is to tenants. Putting yourself in the shoes of your tenants, you can see how high the demand will be for tenancy in a given building.
Along with location, an investor should look at the surrounding businesses. A thriving economy includes a healthy mix of schools, shopping, restaurants, office buildings, homes, hospitals, entertainment, etc. Aim for an area that’s economy does not depend on one industry, like manufacturing. The more diverse the economy is, the less likely the town’s income will drop.
As an investor, you cannot merely count the asking price of the building as the total cost. Calculate the yearly maintenance costs into your expenses, and leave room for emergency repairs. You will also need to calculate how profitable the commercial real estate may be.
Positive Cash Flow
Along with affordability, you need to determine what your profit will be. Your profit will be the rental income minus the expenses. Make sure you have enough income to cover the mortgage, insurance, taxes, maintenance, and other costs. Creating a positive cash flow is a science; if you can see ways to fix up the place to create a positive flow, you may be in business.
Trust the Professionals at Clagett Enterprises for Your Realty Needs
If you’re looking for the perfect realtor for your property or a professional to assist you during your purchase of any home, you can rely on Clagett Enterprises. Clagett Enterprises is a full-service real estate company with almost 30 years of experience in the Frederick and Western Maryland area. For assistance with selling your home and getting the best possible price, contact us online or give us a call at 301-665-6009. To meet our team and see some of our beautiful homes, follow us on Facebook, Twitter, and Pinterest.