3 Things Residential Real Estate Investors MUST Know About Commercial Properties
The next sensible step in expanding your real estate portfolio is to invest in commercial properties. But, of course, it’s not easy.
In fact, contrary to the general perception, investing in commercial properties is quite different than putting your money in apartments and bungalows.
Here are 3 things residential real estate investors must know before entering into the commercial real estate sector:
1. You Must Acknowledge The Difference
The obvious: you must understand and acknowledge the difference between investing in residential properties vs. commercial properties.
The commercial sector has many segments. The major ones include: retail, hospitality, office, and industrial. Each segment has its own pros and cons. Such properties, although deliver higher-yields, are difficult to finance.
In addition, while it’s easier to address the non-paying tenants in this sector, commercial real estate investing is really a teamwork, which can further add to the fuss and may give rise to disputes between partners in the future.
There are, of course, plenty more differences between the two. Do your research properly.
2. A Lot Depends On Your Network
Finding the right commercial real estate investment opportunities is not easy. Some projects, for that matter, so in demand, never even get listed or advertised.
To find and bank on such red-hot, highly promising opportunities, you need a large network of investors, agents, builders and other relevant parties who have good reach and sources.
So, while you can invest in residential properties easily and by yourself, when looking for opportunities to put money in hotels, shopping malls, and more, you need one of the top commercial real estate investment properties by your side.
3. Exiting The Market Won’t Be Easy
People are always looking for houses to purchase. So, when the trend is going against your plans, you can easily get rid of your residential real estate. That’s not necessarily the case with commercial properties though.
If you want to sell your commercial property, you would need to show its potential worth to the buyers. You would need proper documentation and income data of how much money it has made you over the period and what its growth trajectory reads.
If the market is heading for a slump, unless you act intuitively, selling your commercial real estate would be difficult… even when you have the top property investment companies by your side to help you.
These are three things residential investors must know before investing in commercial properties.
Do your research thoroughly, hire commercial and residential real estate investment companies, and then stride ahead smartly.