Commercial real estate development is a wide area for investment opportunities. Beginning commercial property investors have a lot of things to take into consideration. Do you want to invest in retail properties, mixed-use, or apartment buildings? Maybe you’re looking at industrial properties or an office building. What are your financial goals?
Long Term Vs. Short Term Financial Goals
How will you handle your cash flow? Of course, you want to make as much money as possible. Are you looking for a steady income over a long period of time? How soon is it necessary for that money to start coming in?
When you start earning on one property, that will free up more money, and you can use to invest in your next property. This is an important factor.
In some situations, it can be beneficial in the long term to take on a property that does not start earning for a while. For example, you may purchase an apartment building where you need to make improvements before you can start renting, or before you can start renting at a higher price.
How soon do you need your commercial property to start offering returns? What do you really need those returns to be?
Some people may prefer to take on a property that will appreciate over time and hold on to it for the foreseeable future. Others may prefer to take on a property, improve it, and flip it under a year. These strategies work to accomplish different short term and long term financial goals.
The Amount of Work You Need To Do
Will you be hiring people to help you manage your investments? Many beginning commercial property investors prefer to take on the challenge themselves. Realistically, how much time do you have? How much experience? The experience will help give you more insight into how long tasks will take you.
Some commercial investments will require more time but possibly cost less cash upfront, like purchasing a building in need of renovations. Others may cost more, but be ready to rent immediately to get cash flowing.
You may also earn less income by hiring people to take on renovations or manage the property. However, having that time may be more valuable for you if it opens your schedule up so you can work on your next investment property.