The commercial real estate market is a $16 trillion market, and in 2020, investors spent $208 billion on commercial property transactions. Therefore, commercial real estate is a major factor in economic growth.
The good news is that the return on these investments is comparable to major equity investments at an average growth rate of 9.5%. Although the outlook is positive, these investments do have risks. Therefore, these are some things you should and should not do.
Search for opportunities, not emotional reactions
One of the biggest mistakes investors make is buying based on emotion. Also, avoid just acquiring property for the sake of owning it. Instead, search for properties with strong potential returns on your investment. Research the neighborhood, comps, and expected future progress in the area. Look at demographics and population growth statistics. Also, do your due diligence and learn about passive income and appreciation potential.
Build a team, not a one-man army
You likely will not get the most out of your investment money if you do not build a team. You need an experienced, reputable realtor to show you great properties, some of which may not even be on the market. You should consult with an attorney and accountant to ensure you prepare for your property taxes and keep your transactions legal. Consider working with established contractors who provide high-quality work at a reasonable price and can start on your projects immediately. Also, find at least one mortgage broker who can help you with financing.
To get the most out of your investment, consider building relationships with your local title company and financial institutions. With your team, your business plan and strong investment strategies, you are ready to join the ranks of commercial real estate investors.