Four Mistakes To Avoid When Buying Commercial Real Estate Properties

Posted on: 22 July 2016

If you are thinking about investing in commercial real estate, this can be a sound business decision. The buying process all starts with vetting the right properties to purchase depending on your personal situation. Here are four mistakes you should try to avoid when looking into commercial real estate properties to purchase.

1. Watch out for Up-and-Coming Neighborhoods

While you might find a steal on commercial properties on offer for office spaces or buildings zoned for a specific market, if the neighborhood is less than ideal, you might have a hard time with an immediate start up. Neighborhoods that are coined 'up-and-coming' or 'about to thrive' might be looking for investors to buy first, but the long-term return might take a few years or longer. Try your best to work with a commercial real estate agent that will be honest with you about the viability of neighborhoods and do your own research as well.

2. Avoid Spending Your Entire Budget on the Down Payment

While it might be appealing to buy more warehouse space or office buildings to hopefully bring in more income down the line, commercial real estate isn't all profit. You might need to make initial improvements or work with tenants on zoning and permits for renovations. If you blow your budget on your real estate purchase, this might not thrive as quickly as you had hoped. Budget in some savings and opt for a smaller investment so that you can successfully work with what you have.

3. Understanding Long-Range Plans for Properties

As a commercial investor, you might have a clear idea of the properties you are searching for and why these are in your best interests. You might want to get tenants in right away, or you might want to find properties that need some work. Discuss this with your commercial real estate agent so they know what to expect and what your individual needs are.

4. Always Visit Properties in Person

Remote investing is a current trend, but this can come with risks if you cannot see sites on your own. Putting your trust into commercial real estate agents can work, but it might be best to personally visit and vet spaces on your own. You might have a feeling about a space or neighborhood that just doesn't sit well, so you should physically be a part of the process.

Commercial real estate investing can be a great side income or even a full time business. Getting into commercial real estate needs to be done with care and shouldn't be something that is done without research. Finding a solid commercial real estate agent can help your property search go efficiently and hopefully with match your needs with the right real estate options. Contact a company like Colton Commercial to get started.