Commercial real estate investment has many benefits, from increasing your monthly cash flow through rental income to increasing your net worth as these properties appreciate. However, choosing the right property will have a direct impact on your income potential. Therefore, these are tips to help you choose the right investment.
Choose Buildings With Flexibility
Not everyone who wants to rent your space and has the same goals. They may come from completely different industries. Therefore, choose spaces that are flexible or can be easily customized. Your tenants will see the potential in your space as well as the amount of work necessary to get it where they need it. Although they tend to be willing to invest in a long-term location, they want to spend as little time and money as possible.
Focus on Location
Location plays a crucial role in gaining great tenants. For example, if you want to lease property to retail spaces, you need to find investments in high-traffic areas, especially those with already established, regular visitors. These companies also prefer corner lots, easy access, parking availability, established storefronts, easy signage options, and other visibility advantages.
However, if you want to serve industrial companies, you may choose properties that are outside the city or in more industrial sectors. A neighborhood will likely push back on some business types moving in. For example, most individuals don’t want a mortuary that regularly cremates bodies or a manufacturer with loud machinery in their residential neighborhoods. However, they may be amenable to other commercial properties if they don’t impede on their lives or devalue their properties.
Check Zoning Laws and Building Codes
The zoning of a property determines the ways it can be used. Therefore, avoid purchasing properties where strict zoning laws apply. If you find the perfect property, find out how difficult it would be to change its zoning before making an offer.
You should also check local building codes and ensure that your building is up to date and meets these requirements. You may go further and find buildings that exceed these codes in expectation of them changing shortly.
Look for a Sense of Community
Real estate that has a surrounding community often performs the best. Therefore, look for areas that have a sense of community. These businesses and residents support one another. They tend to have loyal customer bases because these individuals value their communities and want to invest in their local economies.
As you create your commercial real estate investment strategy, implement these tips to increase your income potential.