Buying or managing commercial real estate is no easy task. Property owners are typically faced with making the decisions of paying to outsource or handling everything themselves. The latter option means that owners must think about financial, legal, operational, and emergency aspects. Buying or managing property takes time and money, whichever way owners choose.
Here are a few mistakes you should watch out for when making decisions about your commercial real estate.
- When you’re buying or revamping a property, make sure you look at its investment potential, replacement costs, rental rates, and projected growth. Look around the area and identify the buildings or properties it will be competing with, this will help you think about occupancy levels and give you an idea of what the neighborhood needs.
- Research each property thoroughly to make sure you are getting your money’s worth and that you are valuing the property correctly.
- If you’re seeking to buy or sell a property, make sure you look to existing tenant leases as these can often get in the way and complicate any real estate transaction.
- Do some research on building codes and make sure your properties are compliant with them; otherwise you will need to invest time and money in order to fix this issue.
- While partnerships always seem like a good idea as they can lead to more lucrative deals, you need to be careful about this as differences always arise when it comes to improving the property, exit strategies, and approving tenants. To make the best out of a partnership, make sure you sign a legal contract that outlines the business plan for each of your properties.
- Having a homogenous portfolio might be easier, but it’s riskier. When it comes to commercial real estate, property owners can reduce risk by diversifying their portfolio; this means buying and managing different types of properties in different geographic locations.
- Trying to do it all alone. While property owners can certainly manage their properties on their own, hiring a professional is often a smart and efficient strategy to not waste time and money. Overseeing one or various properties is a daunting task, which is why hiring a professional is often a good idea. Yet property owners need to be careful when selecting a property manager to handle these tasks; they need to find someone reliable, someone that’s able to find tenants, someone’s that knows about all legal issues regarding real estate, someone that has a track record, and someone whom they can agree on a fee structure.
If you have any questions about managing or purchasing a property or need advice to make any commercial real estate decisions, let us know. We’ll be happy to help!
