Real estate is often hailed as one of the best investments anyone can make. Generally speaking, there’s a fixed supply of real estate. There’s also steady demand. When an investor can position themselves in between those two factors, there’s a solid chance they’ll meet success. Commercial real estate can be particularly lucrative. Investors can make plenty of money in CRE, provided they approach it wisely.
Before jumping into the world of commercial real estate, it’s a good idea to assess the market. A clever investor will consider both the supply and demand sides before jumping in. Overall, it’s wise to avoid trying to out-think the market. For beginners, observe where others are buying and follow suit. Worry less about why an area is hot and more about getting in on it. When it comes to the supply side, just make an effort to add value whenever opportunities arise.
Most seasoned CRE investors have one major complaint: that they didn’t get started earlier. Commercial real estate is a great way to make money, provided occupancy rates are high and tenants are responsible. However, it’s also important for investors to view their portfolios with clarity.
Sometimes, an investor enters a localized market too early. They may want to hang on and wait for an area to improve. However, if tenants aren’t paying on time or the police are constantly at the property, those are big red flags. Properties like that can cost more than they’re worth in the long run. It can be wiser to move on than to stick with an investment that may never turn a profit. The goal of CRE investors should be to find properties that will go up in value over time. Rent payments are nice, but property value increases are the best way to make money long-term in the CRE game.
One of the most important factors in the success of a CRE investment is the property management team. A good manager will care for the investor’s property as if it’s their own. A poor manager can be the biggest problem a property has. Especially at the beginning, knowing what the property manager is doing and how they’re doing it is paramount.