Venturing into the Commercial Real Estate Business

Thinking about venturing into commercial real estate business. Well, don’t rush into it. Commercial real estate is a very profitable business venture due to the lucrative leasing rates and rental rates. However, there are several things you need to take into consideration with¬† before making this huge investment decision:

i. Budget

Make sure you have a limit on what you are willing to spend on the venture. Allocate money towards the property cost forehand. Consider the future and what investments you may make. Have in mind how you are going to finance the business. Make sure you have your finances figured out. The rule here is to bite only what you can chew. Do not go over your head and invest in a project that will leave you bankrupt. If liquidity is not a priority for you at the moment then go all in.

ii. Have you done your research and market study?

This may seem like an amateur move but it can save your business. Learn about other similar businesses and competitors. For example, it would not be very profitable if you build a mall opposite another mall. This would be you signing your business’ death certificate. A market study will help you realize the factors that can affect your business. Research can also help in projecting future trends in your business.

iii. Convenience to clients

Commercial real estate mainly aims to please the customer. Whether it’s a mall, stores, office buildings or industrial go downs. Your property should be close to your customers. If it is a mall build it right on the estate such that it won’t be stressing out a customerjust to get to it. Make sure you make the client feel as comfortable as possible. Services such as ample parking, lift, escalators, and security should also be kept in my mind.

iv. Laws

Commercial real estate laws vary from one town to another. Each state in the United States has its own laws. Such laws regulate the buying and leasing of such properties. The laws may be complex and may require you to seek the services of a lawyer.Remember any mishap can lead to a lawsuit that can cripple your business. Taxes are also a major thing to consider before deciding to invest in commercial real estate. Governments have different tax rates depending on the type of the establishment.Failure to abide by state laws may lead to prosecution.

v. Location

The location of the premises determines its pricing. Your rental income will be determined by location. The further from urbanization the lower the pricing. Connectivity via rail, road or water transport is of utmost importance in order for your business to succeed .Choose the location by considering the needs of your business, taxes, and room for future growth.

vi. Trust your instincts

Just like any investment, there is an element of risk associated with commercial real estate.if you are unsure of the deal do not commit yourself to it. There are plenty of other opportunities to dive into.

Make sure you exercise due diligence before venturing into the sector.