7 Important Things to Consider Before Investing in Commercial Real Estate
Point Acquisitions prides itself on making a profit in both up and down markets and has an arbitrage strategy similar to a hedge fund going long and short on stocks depending on the market. It is obviously easier to make a quick buck in a market boom as there are more buyers and liquidity. In a down market, there is plenty of distressed buyers and investors looking to make money in these cycles too, but it is definitely a harder sell.
Real estate can continue to appreciate even when the economy slows down – especially if you find the right niche market. It is among the best ways to create wealth. Plus, you don’t need to be a millionaire or genius to make it in this field (trust me – this business is full of clowns).
Table of Contents
7 Things To Consider Before Investing In Commercial Real Estate
1. Employment Opportunities
A place with a promising job market attracts a lot of people. It means more renters for you, especially if your focus is on an area with large rent or own ratio. You can check for reports and data about the labor market in the area of your interest in Philadelphia. If you identify a large company shifting to this place, expect migration. College cities and towns are also great options because of the inflow of students looking for out-of-campus housing. See below for Philadelphia’s employment breakdown, its largest section is education and health care, which are more recession-proof than a job sector as Financial Services.
Location tends to influence the people more likely to rent your property. Consider factors such as proximity to the road, walk score, and proximity to universities, hospitals, local restaurants, shopping, big business centers, and colleges. Demand for houses will be more if the location is central.
If you have a commercial property, your monthly income depends on rent. Determine the average rental rates and price-per-square-foot (PPSF) in the region. Find out if you can achieve below or above the average. You will also need to cover your mortgage payment and other extra costs such as insurance and taxes. If you can not achieve this, just move on.
Every person wants to live in a safe neighborhood. So, ask about the crime levels in the area you want to invest. Check for reports and statistics online or at the local police department; they will give you all the information you need and advise you on the area’s safety.
Look for physical attractions that are both a draw for the renters and a requirement. Consider things such as movie theaters, shopping malls, gyms, parks, and, most importantly – access to public transport.
One of the most crucial things renters look for before moving to a new place is the availability and accessibility of schools for their children. Therefore, researching the schools should be one of your first priorities as it will increase your pool of renters.
7. Future Development
Check out plans for the future of commercial real estate developments in the area, will they impact the area positively or negatively, and will they add value to your property? Determine whether it is a high-growth area or a declining empire.
The safest and most promising investment properties for starters in Philadelphia are small multi-family properties and residential family homes – it is, after all, the row home city – Check it out here. Make sure to take note of the typical maintenance charges which you ought to pay per square foot monthly. Carry out some due diligence and comparative market analysis and determine if the costs are worth the building in question.
Once you find the type of property you love and a safe neighborhood to invest in, search for the best properties with steady projected cash flow and appreciation potential. Point Acquisitions has off-market properties and can assist in sourcing your acquisition of assets – our goal is to find you the best property in your area of interest. However, before you even think of making any financial commitments, seek advice and guidance from local real estate professionals.
About The Author
Please note that Point Acquisitions is not a tax expert or tax advisor. The information on our blogs and pages is for general informational purposes only and should not be relied upon as legal, tax, or accounting advice. Any information provided does not constitute professional advice or create an attorney-client or any other professional relationship. We recommend that you consult with your tax advisor or seek professional advice before making any decisions based on the information provided on our blogs and pages. Point Acquisitions is not responsible for any actions taken based on the information provided on our blogs and pages.
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