What Makes For A Good Investment Property?
Many real estate investments end up generating wild successbut some fall flat
, and end up costing the investor dearly. This discrepancy stems from the basic reality that real estate investments are all different, and no two properties are created equal. The difference between a solid investment and a flop, then, is often in the site selection processmeaning that for
commercial real estate investments, picking the right property is utterly crucial.
Picking properties that are rich in opportunity and light on risk is sometimes easier said than done, but there are certainly things to look for, and general principles of which investors ought to remain aware.
Beware of Fixer Uppers
Here is an example. One of the biggest trends in property investment right now is the concept of flippingbuying a property that is disheveled, rehabilitating it, and then selling it for a profit. On the surface, the arithmetic seems unimpeachable, but a closer inspection reveals that this is often a losing strategy. Simply put, many of these fixer uppers end up requiring far more time, work, and financial investment than originally planned forwhich means they blow up in the face of the investor.
A general rule of thumb is that properties in good repair make for the best investments. This is so obvious and intuitive that it can almost be hard to believe, but nevertheless: Choosing high-quality, well-maintained properties is never a bad thing.
The Other Problem with Flipping
There is an even more basic problem to the flipping model, however, and that is that buying a house and then selling it quickly breaks some of the cardinal rules of real estate investment. More to the point, the best property investments are generally the ones you are willing to own and generate wealth on for a long period of time.
What are the best kinds of properties to invest in, then? Again, it all comes down to quality. Selecting a property that you can feel good about keeping and maintaining for a long time is essential to getting the most out of your commercial real estate investment.
What About Tenants?
Here is another kind of property that commercial property investors should seriously consider: Properties that already have tenants! Say, for example, that you would like to invest in an apartment complex. You can choose a brand new building, one that you will have to market and ultimately fill with occupants. Or, you can look for a property that is already full; you can get pro-rated rent money, and avoid having to do a lot of painting, remodeling, or maintenance.
This is a good rule of thumb not just for investors in multi-family residences, but also for office buildings and retail shopping venues. It might not be possible to find an already-occupied building, all of the time. If you find one, though, you should consider it, because a good chunk of the work is already done for you.
Location, Location, Location
Finally, remember that it is not all about the property itself; location matters, as well. For the commercial property investor, here is what to look for: Properties in moderately priced areas with a good cash flow. You want to invest in an area that is thriving, that is buying goods, that is brimming with peoplebecause that is where you will find commercial real estate investments opportunities that will take you far.
by: Sammy ONeil
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