Buying commercial property versus purchasing a home- is there a drastic difference? The truth is that yes, there is a contrast between the two processes. Rather than seeking a shelter to fall in love with and return to at the end of every day, commercial property consumers are looking for a property that will essentially put cash in their pockets.
Mike Eisenga, commercial real estate investor and entrepreneur, has experience in assisted living, residential, commercial, and retail development. He has had advanced training in banking and finance through the American Institute of Banking. Eisenga goes on to share nine tips and things to think about when buying commercial real estate.
Tip #1: Location is Key
For any business, location can be the top hurdle to conquer when it comes to finding success. A site that is easily accessible to both consumers and employees will pay off generously in the long-run.
Tip #2: Think Ahead to the Future
When choosing a commercial property to buy, put your mindset in the future-tense, and consider what property will be better for your financial future. Consider factors such as market value and the condition of the property.
Tip #3: It Takes Time
You must take the time to realize that the entire process will take longer. This process is not something to be rushed. Remember that investing in commercial real estate takes longer than investing in residential real estate.
Tip #4: Know the Area and the Trends
It is smart to assess your investment risk by observing the property type while gaining knowledge about the area and its trends. You would not want to invest in a night-life property in an area known for an increased amount of crime after dark.
Tip #5: Do Not Just Go with Your First Choice
It is vital to check out more than one property so that you can have options to compare. That way, you evaluate risks better and can feel more confident about your choice in the end.
Tip #6: Look into Neighboring Businesses
If the area you are looking at has neighboring businesses, it is time to do a little further digging. Check out each company in person and ask questions regarding foot traffic and overall business success. Failing businesses can be a lousy investment sign.
Tip #7: Avoid Failing Businesses
Part of your risk assessment is to avoid failing businesses. There is a reason why a company has failed, and contributing factors could be location, poor management, or a weak business model. It is best to avoid investing in any property that has hosted a failed business.
Tip #8: Recognize that This Is Not a Passive Investment
Commercial real estate might not be a fitting financial scenario for those looking to make a passive investment. Some of the most successful commercial real estate investors strive to always play an active role in everything they choose to spend their money on.
Tip #9: Choose a Real Estate Agent and Lawyer Wisely
You want to make sure that you are working with an experienced commercial real estate agent and a lawyer familiar with the area of expertise, too. Be sure to calculate the extra fees of these services into your overall investment.
About Michael Eisenga Michael Eisenga is a commercial real estate investor, entrepreneur, and proud father of three boys. His wide range of skills includes commercial real estate investing, property management, assisting living facility operation, leadership, strategic planning, public policy, and community outreach. Mr. Eisenga is most passionate about finding and improving profitable investments. Lately, he has been focusing on fueling development in smaller communities through assisting living facilities.