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What to know before investing in commercial real estate

On Behalf of | Nov 10, 2020 | Blog |

Often referred to as CRE, commercial real estate is an appealing option for investors because it provides a steady stream of revenue, passive income options and a great potential for growth. Florida commercial real estate can be a great investment option, but there are a few things you should know before taking the leap into CRE investing.

Market cycles matter

Just like all economic trends, nothing in the world of commercial real estate lasts forever. Since CRE is impacted by the GDP, the employment rate and other economic factors, it is hard to make long-term projections about any piece of commercial real estate. Being up to date on market cycles and trends will allow you to be one step ahead of the game.

Create a backup plan

No matter how much of a “sure thing” an investment looks like, there is always a chance of things falling apart. With little to no warning, a piece of property that looks like a long-term money maker can turn into a black hole. It’s vital that you always have a backup plan and a reserve stash of money to make sure that a piece of property turning out to be a failure doesn’t bankrupt you.

Study your market

Whether residential or commercial, nothing matters more in the world of real estate than location. When you invest in a commercial property, you are actually investing in the area that surrounds it. Make sure that you know everything you can about the area, including average income, population projections and more.

Commercial real estate investing is a high-risk, high-reward option. Working with an attorney to guide you through the process of obtaining the property and turning into a source of income helps ensure that everything is being done the right way.