How To Invest In Commercial Real Estate
All around the world we come into contact with commercial real estate on a daily basis be it when we pop to the local coffee shop to grab a cup of coffee on the way into work or the Italian restaurant for a bite to eat at lunch time.
Commercial real estate is all around us and we use it more often that we come to consider.
Of course, such real estate is owned by someone or some organisation. Suitably this is an alternative investment method for residential property investors. You can earn rental income in the same manner you would from residential except you will earn rental income payable from a business.
With commercial properties you are depending on a market that is in some ways separate from the residential market and with that there are some excellent income generating assets out there that may be suitable for you to consider making an investment.
Investing in Commercial Real Estate for Beginners
We all have to start from somewhere and thus being a beginners shouldn’t necessarily mean you are in a bad position. Fortunately there are so many resources out there today that you can gain years of experience in just a short few hours of taking time out to read up and learn from others. The real estate company FJP Investment comes into contact with investors with varying degrees of experience, some have years of proven experience and some are just getting started.
Being new to the sector can actually be a good thing since you are fresh and more able to adapt to the current market trends that are working currently. What worked thirty years ago may not be the tactic to make real estate pay in today.
The biggest resource that can help you today is web based, look for examples of thriving businesses. Look at how they do what they do. Look at the space they have and how they make the best use of the space. Innovation? How do they get so much revenue from so little space?
At the end of the day, when buying into a commercial real estate venture it is important to have vision of what your customer will see when he/she is prospecting for a new premises.
Research papers such as the 2015 UK Property Market Outlook report from CBRE are useful guides to the industry.
Commercial Property Investors
They come in all shapes and sizes. There is no “one box fits all” category that we could place the typical commercial property investor. Generally we see commercial property investors have at least got experience from owning residential property and the commercial sector is a bi-product of looking to diversify away from residential while remaining in the property industry.
Also we are seeing large multi national companies buying big in the commercial sector. Rental returns are steady and consistent which is the ideal scenario any investor should be looking for.
Commercial Real Estate tips and tricks
Sure there are tips and tricks that can be given, but really as investors we must identify a strategy and once identified; stick with it.
We must ensure our emotions are not allowed to enter the buying process. Those pretty pink walls may not be so practical once the tenant has had the paint brush out and given it a coat of white. There are so many variables that can encourage our emotions to run wild and more often than not get the better of us. We are seeing an emerging trend of books, guides and seminars that promise the latest and greatest real estate tips and tricks but in reality there is no need to complicate what is already a complicated industry.
KISS is an acronym for “Keep it simple, stupid” – We very much encourage the keeping it simple notion when seeking income opportunities from commercial real estate.
Commercial Real Estate Advice
When seeking investment opportunities it is always wise to seek advice from a qualified financial advisor whom is able to advise whether such investment is suitable for your circumstances. You might like to talk with friends and family that have experienced such similar investment. How did it go? What did they learn? The voice of experience is always your friend and you should soak up such information where possible as knowledge is very much your friend.
You must filter the good advice from the bad advice.
More often than not friends can bring valuable experience to the table but often we find too little experience is often an inexperienced source of advice.
Where possible, seek financial advice. The financial advisor will not only assess the opportunity but also the risk appetite of yourself. What is suitable for 25 year old on £40,000 per annum salary with 40 years of potential work time may not be suitable for the 65 year old retired doctor collecting his pension.
Best advice is to consider that you worked hard for your money, let the processional work hard to make your money work for you.