There is no question that the acquisition of commercial properties can be a great way to build wealth, security and a successful business. People like Larry Polhill have been in the business of acquiring commercial property since they were young, but it is never too late to get started. All you need is a plan, the right property, and expert advice. If you are exploring the possibility of investing in commercial real estate, here are some things to keep in mind.
Requirement 1: A plan
In order to recognize the right property when you see it, you need to have a plan. Not just for the next month or year, but for a few years at least. You must make sure that you have a very clear idea about how you want to use the property – and you need to make sure that there are no laws or regulations that might prevent you from using the property in different ways. It is also important to understand the effect that purchasing a property may have on your finances – for example, it might leave you with a cash flow shortage over a few years, which means that you need to think not only about the property you are considering acquiring, but also all of the other assets and financial obligations you have. You need to be sure that you won’t come to regret the decision to buy if the market changes, if interest rates change, or if another asset requires an infusion of capital.
Requirement 2: The Right Property
It should be obvious that you can only find the right property with a clear plan in mind. It is the plan that should guide you, and which should hopefully keep you on track – without a plan, it is too easy to get caught up in the spell of a property that seems “too great to pass up” but which will ultimately not work for you or your needs. With a plan in mind, you can ask the right questions and seek the necessary information about any property that you are considering. This should include an analysis of the local market – depending on whether you are planning to hold the property for years or to flip it right away, the potential for prices to increase will be an important thing to consider. Don’t forget about taxes, zoning regulations and other by-laws that might prevent you from using the property as you want.
Requirement 3: The Right Team
Don’t shy from spending time or money to make sure that you aren’t buying a lemon. Arrange for inspection to make sure that its engineering, electrical, environmental and architectural systems are sound. Get a sense of the life expectancy of major property components so that you understand when you may need to repair or replace roofs, plumbing or electrical systems, foundations, and so on.
As you can see, it can take time to develop a plan, to find the right property, and to make sure that it is a good investment. This time is well spent, however, because the last thing you want to do it to be stuck with a property that will not pay for itself in the long run. Do your homework and take your time!