7 Do's and Don'ts before Investing in Commercial Real Estate. Don't Attempt the Same Mistakes Again

by Richa Malhotra Real State
There are many things which are to be kept in mind while investing in commercial real estate. In reference to these issues, following are certain points which states the things to be done and the things which should not be done. Naturally a fair outline of certain do’s and don’ts are discussed below which I think will be helpful enough for the investors of real estate:

1. Choosing wrong part of the cycle:

The existence of four market phases are not that common. The assumption is that, most of newbie investors think that real estates are only appreciating, and if one bought real estate and held tight for a long term, that would be okay. So, purchasing the property for commercial purpose choosing the right cycle becomes very significant.

2. Ignorance of market and demographics:

This mistake could have easily been one’s biggest mistake, but if the person had bought the asset in a buyer’s market, many of his sins would be forgiven or at least diminished. It is apparent in the past few years that many investors have made money in spite of their many mistakes. Every rising tide helps all ship, and cap rate compression helps those who are overpaid.

3. Not knowing the rents and property values:

When a person is deciding to buy a commercial property, he must be having the proper knowledge of the rents and the property values. One should take this education seriously and learn how to underwrite a deal and focus on value-add opportunities. If one is simple unaware of the market rate for commercial leases would likely to fail miserably at valuing the asset, and it will lead him to hugely overpay for the property.

4. Unfamiliar with the asset type:

Running a multifamily is vastly different than operating a mobile home park. One should be familiar with the dealing of the retail, industrial and office tenants.  One might have experience with rentals but still even be completely unprepared for dealing with retail, industrial and office tenants. Lack of experience of commercial real estate might affect all three legs of the framework—buy right, manage right and finance right.

5. Bad negotiation:

It has to be kept in mind that price is not the only factor when negotiating a deal. One must focus on the seller’s motivation as well to part ways with the property. Instead of doing this, one should not rather show that how the person is desperate to buy the property and things like that. Hence the negotiation should be good enough to hit the bull’s eye.

6. Falling in love with the property:

This is a huge mistake, often done but must be avoided for the first-time investors. One often gets impressed with the looks of the property, the prestige, and imbuing emotion into the decision-making process. But one should keep in mind that this is not a residential real estate, where the view matters. Net operating income rules in a commercial real estate, and one has to base all of his purchases on actual numbers, rather than how the property makes him feel.

7. Overspent on repairs:

A person who is buying a commercial property should never be spending too much money on repairs. The problem is not the over fix. The problem is twofold: Number one, drastic underestimation of the cost of repairs, and two, repairing of items that would not lead to additional revenue.

Anthurium is a rightful property where one can invest keeping the before mentioned do’s and don’ts in mind. It is situated in the heart of Sector 73, Noida. It is having all the benefits a client looks forward for investment and can highly give it a preference as office space for sale. This business IT Park is designed in a mix of luxury offices with high street shopping area, standard food and signature dining space as well.

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About Richa Malhotra Innovator   Real State

29 connections, 1 recommendations, 96 honor points.
Joined APSense since, November 28th, 2018, From Noida, India.

Created on Jan 15th 2019 00:20. Viewed 931 times.


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