Investing in commercial real estate (CRE) may seem daunting at first. However, it can be incredibly rewarding once you dive into the process. If you’re hesitant because you’ve never invested in CRE or aren’t familiar with the process, this article will guide you toward becoming a successful CRE investor.
Investments always come with risk. No matter the type, investments require using your resources, time, and effort. This can be intimidating, but to reach your business goals and financial freedom, taking risks is essential. Therefore, investing in commercial real estate is a wise decision, especially if you keep these key factors in mind.
Know Your Market
First and foremost, understanding the market is crucial for CRE investors. You need to assess the value of real estate by considering demand, supply, and buyer willingness. Demand is defined by the number of properties sought in the market at a given time and price. Additionally, you must consider the property’s rarity and utility. Is it something tenants need and can rarely find? Is the property truly suitable for its intended use?
Moreover, make sure the property is transferable. Ensure there are no legal obstacles or encumbrances in the deed that could hinder its sale or transfer.
Tip: Use feasibility studies and Site Investigation Reports (SIRs) to gather comprehensive data, including business structure, zoning laws, land surveys, and traffic issues around your prospective investment.
Follow a Blueprint
Jumping into a CRE investment without a plan is risky. Just like a non-swimmer wouldn’t dive into deep water without a life jacket, a CRE investor shouldn’t venture into the market without a strategy. A solid plan is essential. When you thoroughly understand your market, you can create a blueprint to guide your investment decisions. Consequently, this plan helps you navigate the complexities of commercial real estate and minimizes the chances of failure.
Find the Right Approach
In CRE, using a multi-pronged approach often leads to the best results. A diversified strategy helps you find properties while also securing great deals. Furthermore, you should know the difference between direct and indirect CRE investments. Direct investment involves owning the property, while indirect investment includes owning market securities like Real Estate Investment Trusts (REITs). REITs allow you to invest in portfolios like hotels, offices, and retail spaces, providing steady income without the responsibilities of property management.
Embrace Technology
The real estate industry is rapidly evolving, but many investors still struggle to keep up with technological advancements. Don’t resist change. In fact, leveraging technology improves connectivity, helping you manage your investments more effectively. Social media and websites create valuable linkages, giving you more control and insight into your properties. As a result, you can make better-informed decisions.
Adapt with Agility
Successful CRE investors stand out by being agile. The real estate market is tech-driven, requiring investors to adapt and realign priorities. Agile decision-making and an updated portfolio are essential to staying competitive. Additionally, continuous learning and up-skilling will help you maintain and grow your investments. Agile investors build strong customer relationships, leading to more significant investment income. Therefore, staying flexible in your approach is key.
Conclusion: Taking the Leap into CRE
Becoming a CRE investor may feel overwhelming at first, but the rewards far outweigh the risks. Success in commercial real estate doesn’t happen overnight. It takes time, learning, and experience. However, by knowing your market, following a plan, embracing technology, and remaining agile, you can thrive in the world of CRE. If the risks feel intimidating, remember the potential rewards waiting at the finish line.
Even after outlining all the information above, writing a letter of intent (LOI) can still seem daunting. That’s why the Leveraged CRE Team at Commercial Properties, Inc. is here to help locate commercial space for lease and assist in using a letter of intent to land such space. Contact us at (480) 330-8897 or send us an email at request@leveragedcre.com.
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Meet The LeveragedCRE Investment Team
Phill Tomlinson and Eric Butler are seasoned commercial real estate brokers with over 44 years of combined experience. They lead the LeveragedCRE Investment Team at Commercial Properties, Inc. (CPI) in Scottsdale, Arizona, specializing in investment sales and tenant/landlord representation across the Phoenix and Scottsdale submarkets.
The team leverages their extensive knowledge and expertise to help investors and property owners maximize their returns and navigate complex real estate transactions with confidence.
Stay informed with the latest in Commercial Real Estate strategies designed to enhance your income property investment results by bookmarking www.leveragedcre.com. Let us help you stay ahead in the market!