Commercial real estate investing can be tricky to navigate if you don’t know what you are doing. Before you dive right into investing in commercial properties, you should have a plan. Planning out your investments will increase your chance of being successful. Here are six ways you can increase your profit when investing in commercial real estate.
1. Make Goals and Invest Strategically
When you invest in commercial real estate, set goals from the start. Maybe you want to create a stream of passive income in addition to your day job, or maybe you want to make it your whole job. How much do you need to make? How many properties do you want to invest in? Understanding what you want to obtain from investing will help you decide on properties to invest in.
Once you know your goals, start taking the steps to get there. Randomly buying and selling properties without a strategy will not get you toward your investing goals. Plan out each month and what your earnings should be to reach your goal for the year.
2. Understand Market Changes
It is important to understand when the commercial real estate market is going up or down. You want to avoid investing in properties that are overpriced and need a lot of maintenance. Take the time to find the right properties for your needs and your budget. This may take some patience.
3. Don’t Overpay for Properties
You don’t want to invest in an overpriced property needing a lot of repairs. Waiting for the right time to invest is important, but offering the right price for properties is also key. If you are new to commercial real estate, be careful that you are not overpaying for a property. Typically, you should buy a commercial property priced 10-20% below the market rate.
4. Look for New Markets
Some of the best commercial real estate investments come from new markets that other investors are not yet aware of. New market opportunities may occur because of a business or several businesses moving into an area. They may also occur if more residential properties are being built in an area. Keep an eye out for the up-and-coming commercial districts in your location. Don’t be too late, or the competition will already be there.
5. Create a Strategy That You Can Trust In
Commercial real estate investing is a tough industry for those who don’t have a strategy and don’t have confidence in the properties they invest in. Confidence in your investing will help make you successful – and doing your research will help give you confidence. This includes doing the math, getting to know your market, and making good decisions when it comes to buying and managing properties. When you use the right tools, have the right knowledge, and craft a detailed strategy, you can move forward with success.
If you need help with your commercial property management, STRATAFOLIO can help! Schedule a 1:1 demo to see how our QuickBooks-integrated software can help you manage everything from tenants to finances.