Nearly one-quarter of Americans see investing in real estate as a pathway to wealth. If you're one of them, you want to make the most out of investing in property.
How do you get the best return on investment? Read on to find tips for successful commercial property investments!
Consider the Location
When you're considering a commercial property, assess its location. Is it in an up-and-coming area of town? Or is it in an area on the decline?
Location matters in commercial real estate. While you might be able to score a better deal in a less desirable part of town, you might have challenges finding tenants. And the tenants you get might not stick around very long.
You don't want to spend beyond your means. But you do want to find a location with upside and accessibility. Do your research and consult with a real estate agent familiar with the area's economic and population trends.
Determine How to Maximize Space
To maximize property investment income, you'll want as many tenants as possible. You'll get more rent when you have more tenants!
This means looking at the square footage of your property and its layout to determine a logical division of space. For instance, you may be able to put up walls to carve out spaces for eight tenants running small businesses. The initial investment in some structural changes will pay off in the long run.
Understand the Maintenance Needs
Not all properties are alike when it comes to maintenance needs. And if you're investing in a rundown property, be aware that you'll need to be prepared for the unknown. This means bringing things up to current codes and ensuring that the property is safe for tenants.
You may need a property manager to coordinate everything, too. Aside from upfront renovations or fixes, you'll have ongoing needs. And if you have multiple properties, managing everything can become overwhelming.
Offloading this responsibility onto a manager can free you up to pursue other investment opportunities. And tenants will appreciate knowing they have regular access to someone for questions and concerns.
Monitor Finances
Keep in mind that you'll need to have reserves built up for expected and unexpected commercial real estate costs. For instance, you might need a new roof or have sudden plumbing problems. Making a profit over time means being wise with your finances so you're never in a bind.
Establish specific funds for maintenance and future investments. Avoid the trap of trying to do too much too quickly. Make a budget that shows monthly and annual expenses, like loan repayments, so you're never blindsided.
Make Succesful Commercial Property Investments
Commercial property investments can be lucrative if you go into them with a plan. Research the area where you want to invest and know what kind of money is required to make the property inhabitable. Maximize your property's layout and never forget to keep tabs on your finances.
Start making a better return on investment. Contact PMI for help maintaining your commercial property!
