4 Questions to Ask Before Buying Commercial Real Estate

Who is to say what is the best way to invest your hard earned money. Sure, sometimes starting a business may be a great solution, but keep in mind that it could require more time and effort than you have to spare. Because of this, it might be for the best to purchase a commercial property, that could generate a passive income overtime. Later on if the price skyrockets, you can sell it and in this way achieve capital gain. Nonetheless, buying the right commercial property is not a simple matter and here are four questions you need to ask before finally making your mind to buy.

1.      What kind of property you want to buy?

First things first, you need to ask yourself one simple question: “What kind of property do I want to buy?” This depends on various factors, most prominently a budget that you have on a disposal. Sure, it is much cheaper to purchase an office building than an industrial property, but then again the height of the rent you will receive for such a place differs as well. Furthermore, ask yourself what kind of industry do you want to get yourself involved to. Do you want to buy a leisure real estate (like a hotel, café or a restaurant) or you are interested more in a retail oriented business as your tenant (shop, mall, retail store)?

2.      What will you use it for?

Even though we mostly focused on the rental potential of the property in the introduction, you should never ignore the possibility of using this place to host your own business. In that case, you must have at least some vague idea about what that business will be, so you could investigate how well would this property fit your needs. In the long run, owning a place vs. leasing it for the needs of your business can make a huge difference.

3.      How much are you willing to invest?

Before you say we already talked about the budget, we are not talking just about the price of the property, but further investments towards it as well. Sometimes, you can purchase a place, invest a bit into its restauration and give its value a gigantic boost. Still, as we already discussed, you may not have enough time or resources for such a thing. Nonetheless, you should be aware of where you make that final step of looking for the ideal commercial real estate.

4.      Are you ready to be a landlord?

Finally, although it is true that gathering passive profits from a rental property is easier than actively running a business, being a successful landlord is far from easy. Your number one concern is to learn how to spot bad tenants. With businesses this is fairly easy since all you need to do are a simple credit and a background check. You could also contact their previous landlord for some additional info. Sure, there is always a risk of them not being honest, but is mistrusting them a risk you are willing to take? Finally, you need to keep in mind that one part of being a successful landlord lies in accommodating your tenants, which is not something everyone is cut out for.

Conclusion

By giving a straight answer to just these four simple questions, you will significantly improve your chances of getting a best deal possible out of this entire situation. Apart from telling you whether or not you should buy that particular real estate, it should tell you whether or not you should enter the world of commercial real estate at all. Just keep one thing in mind, there is no such thing as easy money and those looking for something like this in the commercial real estate are definitely in the wrong place.