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Six factors for successful commercial real estate investments

| Jun 12, 2020 | real estate

For Indiana commercial real estate investors, there are several factors that influence success, especially for those beginning to invest in this segment. Commercial real estate know-how will determine the success of an investment. The following are six factors for consideration.

1. Commercial real estate varies by type; it can include industrial, office, retail, multifamily, and special purpose as well as medical, self storage, elder-care, hotel and more. Since some sectors perform more than others, depending on the economy; it is wise to identify which are most profitable at the time of investment.

2. One should know about supply and demand in the area’s market. Conducting market research prevents investing in an over-saturated market.

3. Investors should understand the market’s cycles. The health of the economy as well as the unemployment rate and the GDP all directly reflect on the profitability of commercial real estate.

4. Due diligence is important. Review of documents, financials, tax returns and profit and loss statements from the previous owner should be undertaken. This is also the time to be conducting surveys, property inspections or any other necessary research.

5. A capital reserve and contingency fund should be available. This is to prevent unknown factors from negatively affecting the profit. Added funds are set aside to help meet unexpected events or help meet debt until the property is stabilized.

6. Preparation for setbacks and the extension of timelines is expected. One should be prepared for the challenges with a plan of action that can be implemented in the event of delays.

Help with commercial real estate law can make the process of investing in commercial real estate less complicated and may aid in achieving profitability in the long run. Investment and development services as well as mediation in disputes are sometimes needed.