Commercial real estate ventures, such as buying a Plano office space, require a big investment and usually are only an avenue for investors with a high net worth. Recent opportunities have occurred to allow small time investors the ability to buy commercial real estate. Despite an opportunity to invest in this type of real estate, many investors who are beginners find it difficult to generate sufficient revenue due to their lack of knowledge about the real estate business. There are many ways small investors can venture into the commercial real estate venue. Following are some of the ways to accomplish this investment goal.
- Buy and Rent – Investors can get into the real estate business simply by purchasing new property directly from a developer or purchasing used properties directly from an owner and then renting the property to another businesses. If the property is located where there is a high demand for such property, it should provide investors with a steady stream of income for a long time. One downside of leasing property is that it requires constant attention and management by the landlord or property owner in order to generate a steady stream of income.
- Real Estate Trading – Real estate trading simply translates into buying and selling real estate property. Real estate traders buy property and hold it for a certain period of time, eventually selling the property for a higher amount than they initially paid in order to generate a profit. A real estate trader will decide whether the property should be renovated prior to reselling it.
- REIT – Real Estate Investment Trust or REIT is a company that owns and manages income generating real estate properties. Instead of purchasing a real estate property on their own, the investor can buy shares from these companies and become a shareholder. As a shareholder, revenue will be generated from the real estate properties owned by the REIT company. The good thing about a REIT is that the company takes care of the maintenance and finding tenants for the existing real estate assets owned by the company, such as a Plano office space, as well as purchase new property for the company.
Despite the various ways to invest in real estate, there are four certain ways a real estate investor can ensure the money-making potential of a commercial real estate property.
- Location – Determine the market trend direction for the location of the commercial real estate. The real estate business depends heavily on demand for such space. If the demand in a particular area is high, then the cost of rent and the revenue-generating potential of the property will be high. On the other hand, if people are steadily leaving the area and the amount of construction of new real estate is high, then the area is unlikely to be a good place to which to invest in real estate.
- Income Potential – Before purchasing commercial property such as a Plano office space, it is also important for the buyer to ask the seller why the property is being sold. If the seller’s reason is due to the poor income-generating capacity of the property, then the buyer must ask themselves how they can overcome that problem. If there is no foreseeable solution, then it is advisable to look for another property that has a better chance for income-generating capacity.
- Cost vs. Yield – To ensure sufficient profit from an investment, it is important to determine the income that the property actually yields and compare it to the amount owed for the property. Make sure before purchasing a property that the revenue of the property is enough to cover the debt for the real estate and enough to generate a sufficient profit. The mistake some investors make is they over-anticipate the income of the property and end up with less profit than what was expected.
- Building Inspection – Once a real estate property has been found, it is always a good idea to have the building inspected by a professional before finalizing the purchase. Some properties that are sold for a low price have hidden defects and faults that an untrained eye could easily overlook. Investors who neglect the importance of an inspection often end up paying for costly repairs before they can even begin to utilize the property.
Investment in real estate such as a Plano office space can be a lucrative business. To ensure a high profit margin, it is important to take the time to learn about the real estate market. The important investment information provided above is a good overview of the various types of real estate investment and ways to guarantee the money-making potential of a property before deciding to invest in that property!