Things to Know Before Venturing into Commercial Real Estate

To any investor, commercial real estate is certainly an appealing venture. It offers the opportunity to grow business interests and spread into new client pools. However, commercial real estate is an entirely different ball game altogether, and it requires a lot of consideration, unlike the residential real estate venture and investment.

Investing in commercial properties have the potential to be profitable, and according to all indications, it may be the best choice for anyone involved in real estate. However, there are a few things you need to put into consideration before going ahead to venture into commercial real estate.
Some of the things you should consider are:

The Property Value

The value of the commercial property you plan to invest in should be properly assessed. Unlike other kinds of commodities, real estate properties cannot be valued the same way the other commodities are. Several factors affect the value of a real estate property, from its location to the construction quality, future progression, and local economy

Before investing in a commercial property, ensure that you have done your research, find out the prime areas, gauge market price, and then make a purchase.

Avoid Business Models or Businesses that are Failing

Some business models are starting to fail, especially with the advent of the internet. If most of the tenants on your commercial property are things like bars or cyber cafes, it might become problematic for you.
Research failing businesses and failing business models so you know which ones to avoid.

Consider Commercial Property Management

Investing in commercial real estate demands a lot more involvement than simply holding and selling. In this case, the property will need to be managed, hence the need for commercial property management.

To solve this, you could simply invest in a real estate team, which will involve an investment consultant, a property manager, a legal professional, and a real estate agent. Each of these experts will help out with the commercial property management, helping you through the customary practices and regulatory requirements.

Proper commercial property management will help mitigate risk, increase profit margins and reduce stress. A property manager will also make sure your commercial property conforms to standards for parking lots, staircases, fire extinguisher availability, green features, etc.

Governmental Influence

In Nigeria, the Governor of the state owns every land in the state and makes city plans through housing corporations and town planning. As a part of the plans, the Government stipulates areas where commercial properties should be situated.

It would be a bad decision to invest in a commercial property without doing your homework to confirm that the location of the commercial property has not been designated for a different purpose by the government.

Understand the Market

This is one of the most important steps to venturing into commercial real estate. The fundamentals are important and include things like rents, competition, legal implications, vacancy and so much more.

Studying and understanding these will let you make informed investment decisions that will yield high returns. This will also enable you to diversify your commercial real estate investments when you need to.

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