The game of commercial real estate can be won in many ways. While nothing is a sure thing, real estate offers many opportunities for the savvy investor. Whether you want to build wealth or simply maintain it, there are several strategies that you can implement to get where you want to be. Let’s look at a few of the more popular methods for investing in commercial real estate.
Tricks Of The Trade
One of the more classic approaches to commercial real estate investment is the buy and hold strategy. In this maneuver, you buy a property that is valued at a fair price. You then simply hold the land for a number of years. While you do this, the city comes to you. Developments are going up all around you. Yours is the last piece of raw land around and every developer in the state wants a piece of it. You then sell the land for more than you paid for it. As you know, land is the only commodity that they don’t produce any more of. Therefore, the price of your land will eventually go up.
While there is a great deal of money to be made in this sort of venture, it can take a long time to mature. This is great for someone who has a big chunk of money that they want to sit on for a few years. There is no set time limit as to how long it will take you to win. You have to get out when you feel the time is right. Look for the signs around you. If the trends of development in your area are coming towards you, wait for a while. If you’ve had the land for ten years and the city that you just knew would be the next boomtown turned into a ghost town, you might want to get out.
Another great way to invest in commercial property is through the rehab market. This is where you buy a run-down property that needs a lot of work done. You fix it up with a little elbow grease, then after it’s up to par, you put it back on the market and make a tidy profit. There is a definite need for this as properties are always getting old. The most important thing to remember in this type of venture is you make your money when you buy the property, not when you sell it.
You must find properties that are undervalued. If you overpay, no matter what you do to the property, you’ll still come out behind. You need to find properties that need a lot of work. This has the highest potential for a great return. Don’t get involved with a property that just needs a new coat of paint and the yard mowed. This will not make you any money. In fact, you’ll most likely lose money. Stick with the properties that need the most TLC and you’ll come out on top.
Another popular strategy is that of quick turning a property. This involves finding distressed properties. You search for a great deal that is extremely undervalued. This could be a property that is facing foreclosure or bankruptcy. Someone may take a significant cut in the price in order to get out fast. This can benefit you, the investor, greatly. You then take the distressed property and put it back on the market quickly. Since you don’t have to sell quickly, the property will get fair market value and you can make a profit. As with rehabbing properties, the key is finding cheap properties that you know are worth more. This is where all of the money comes from in this type of transaction. If you know the market, you can do very well with this type of deal.
Whichever method of commercial real estate investment you decide on, make sure it’s the right one for you. Consider all the factors carefully before making your decision. Just remember that you too can succeed in real estate investment.