The world of commercial real estate loans can be a risky business. During the financial crisis of 2008, commercial property values plummeted. For real estate investors, lower housing prices meant investment opportunities. How can you know which properties are best?
There are many commercial real estate options out there. Here are four tips for choosing the best one:
1. Have a Course of Action
Know exactly how much you are willing to spend, and how much profit you expect to make. Also, you need to know how many tenants are occupying and paying rent in the building, as well as their backgrounds. In commercial real estate, the last thing you need is a surprise.
2. Keep Your Eyes Peeled
Pay attention to damage that will need to be fixed and anything else that will require additional expenses. Will the purchase of this property help you reach your goals? Think ahead.
3. Visit Surrounding Locations
When evaluating a property, examine the surrounding neighborhoods. Visit some open houses and chat with homeowners in the area. This will give you a better sense of what kind of property and neighborhood you’re dealing with.
4. Get a Toxic Report on the Property
Most commercial real estate lenders request toxic reports. If your property is contaminated, thus forcing you to foreclose, you are the one who pays the cleanup costs, unless you get a toxic report first. Be diligent.