| Investing in Commercial Real Estate? Avoid These Errors

Posted in Finance at 9:00 AM by Loftis Consulting

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Investing in real estate is often said to be where the all the money is. While the reliability and profit margins of real investments is often overstated, there’s no denying that it can be an extremely lucrative area of investment. But what if you’re investing in commercial real estate? In that case, your returns could be even higher.

But it’s not exactly a walk in the park, nor is it all that similar to residential real estate investment. Many people who have found great success in the latter have moved onto commercial real estate, hoping to parlay their winnings and achieve even greater success. They often find themselves surprised by how different the two can be!

So it’s important not to go into this with too many assumptions. There are a lot of mistakes you could potentially make. We’re going to take a quick look at some of the biggest errors you can make in the world of commercial real estate investment.

 

Not Marketing the Property

There are loads of new businesses being created every day, and a lot of them need an area in which to do their work. So surely people are going to come to offices you’re investing in without you having to put in much effort? Wrong. Not only do you have to consider the fact that rival commercial real estate investors are engaging in marketing that will see their properties listed way ahead of yours; you also have to remember that more people are choosing to run businesses from home than ever. The right marketing can help combat both these problems. These properties are definitely not going to sell themselves!

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Neglecting Maintenance

A lot of investors in this area make the mistake of neglecting the maintenance needs of their properties. People tend to know that residential real estate needs a lot of maintenance and repair, but they may also assume that this isn’t that important when it comes to commercial properties, perhaps because people care less about their offices than they do their homes. This is a mistake. Ensure that all the properties receive the maintenance they need. If the building as a whole needs work, then ensure you’re hiring the right experts. A commercial roofing contractor, has the expertise to maintain and fix a roof that technically covers several properties.

 

Assuming All Prospective Tenants Are Wealthy

When people think about business owners, they often imagine very wealthy people; the kind of people who sit with their feet up on their desk all day, lighting cigars with burning $100 bills. The truth is many of them are people who have only owned their business for a couple of years and have perhaps not even turned much of a profit on their business yet. So if you’re thinking of jacking the rent of your properties up to staggering prices in order to get a healthy piece of all that business wealth, then you should probably rethink your approach. While you should also take care not to let yourself get a hard bargain on the lease, trying to squeeze these business owners is simply not a great strategy.

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