Investing in commercial real estate has become popular because it has been proven to generate attractive long-term yields compared to similar investments in stocks or bonds. It also offers leverage because a small cash investment can gain a high return in relation to the investment. A good real estate investment typically delivers steady cash flow. A tangible real estate asset can be used to diversify an investment portfolio, and real estate assets tend to increase in value over the long term. A good real estate investment is also a hedge against inflation.
Ah, but there are risks. These include location, construction, regulatory, macroeconomic, credit, and interest rate risks.
What Are Commercial Real Estate Properties
Properties that can be considered for a commercial real estate investment typically include any property that is leased out for business purposes. Commercial real estate types include office buildings, retail properties, industrial and warehouse facilities, multifamily properties, and special purpose properties. Additional types include medical, hotel, self-service, elder care, and land.
Newbies Embarking on a Real Estate Investment—What You Should Know
Consider these points before embarking on a real estate investment:
Not all property types nor all properties of the same type perform equally.
Results depend on market conditions and supply and demand in a specific area. It is crucial to study and understand the market that you want to invest in.
Understand market cycles including the area’s unemployment rate, the general health of the economy, and GDP levels.
It is critical to do thorough due diligence on each prospective investment property. That should include reviewing financials, tax returns, profit and loss statements, property surveys, and a thorough property inspection.
Make sure to be adequately funded including a contingency and capital reserve fund.
Be prepared for setbacks and extended timelines with some investment projects.
Seek Expert Financial Assistance
Contact 18 Sierra Financial. Our mission is to accelerate the growth of emerging companies to create value for shareholders. We have a record of implementing innovative strategies and getting deals done.