Mistakes in CRE investing

On Behalf of | Jan 11, 2018 | commercial real estate

Florida residents who are interested in commercial real estate should be aware that purchasing and managing investment properties properly requires significant effort. The challenges can lead to certain mistakes, which investors should make every effort to avoid.

One mistake investors should avoid is making decisions regarding investment properties without having all of the necessary information. Making informed decisions about how an investment property may perform requires considering rental rates, expected growth and replacement costs. The type of competition that currently exists or may exist in the future also has to be considered. To help them make choices, investors may consider using the services of professional asset managers whose significant market knowledge, experience and intuition can help locate ideal properties with good potential.

Another mistake commercial real estate investors should steer clear of is not diversifying. Diversification is one of the ways investors can reduce their risk. Risk can also be minimized by investing in various types of properties in different locations. This strategy allows investors to still have properties that perform while other do not. While individual investors who purchase properties on their own may not be able to afford to execute the strategies that can reduce their investment risks, there are private real estate funds they may use. While these private funds charge fees, the higher yields and lowered risks may make them worthwhile.

Prospective investors in commercial real estate may also want to have an experienced attorney on their team. The attorney can check to see if there are any potential zoning or title problems with a particular property. Once a decision is made to proceed, the attorney can prepare the purchase agreement and review any existing leases.