If life were perfect, then buying a home or commercial real estate in Windsor Ontario would be painless and worry-free. Without the proper research and resources, it is difficult to know if a property you are considering is a good investment or poor one. Unfortunately, we live in the real world and transactions can often go wrong, especially when you least expect it.
Buying and selling residential and commercial real estate is vastly different. Commercial real estate can be broad and diverse, so it’s important to make sure you have researched and evaluated throughly the best properties you can afford. After all, the whole point is to generate a positive cash flow while watching the value of a the property grow over time.
But how do you find the best properties and how do you know that what you want isn’t a huge mistake?
1. Think like a professional:
You will need cash and a clear vision of what you want in the next several years. Income on commercial real estate properties is related to usable square footage, so you will see a bigger cash flow than with residential properties. Keep in mind that with the tighter credit issues, you will need more money for a down payment. Commercial real estate investors know this and are prepared to put up the cash.
2. Create a plan of action:
What is your budget? How much can you afford? What are your goals for the deal? How much rental space do you need to fill? Do you have tenants already? How much rent will they pay? Any remodeling costs? As you can tell, you must have a very clear and focused idea on your budget. It all revolves around money. If you go into a deal without any firm plans regarding your financial status, then wait until this is resolved.
3. Have an exit strategy:
The best real estate investors know a great deal when they see one, but they also have an exit strategy where they can walk away if necessary. You will need a lazar sharp focus to determine what repairs are needed, the costs that will incur, and if it will create havoc on your budget. If you don’t have a way out when the deal looks like it is headed south, then you may be at financial risk.
4. Look for motivated sellers:
Like residential properties, the goal when buying commercial real estate is to find motivated sellers. The best deal you can find is someone who is eager to sell at below the market value. When this happens, you have a seller who is eager to negotiate and quite frankly, you will have the upper hand. If you have a seller that isn’t all that eager to sell, or plans to hold out until they find a buyer who will pay close to their asking price, then they won’t negotiate much.
5. Research the area:
Of course, if you find a great deal, there may be a reason why. Walk around with your real estate agent and find out everything you can about the neighbourhood. Is it an up-and-coming area which at times, can be a risky deal. Will renters want to live and work there? Will they feel safe? Is parking readily available? Is the property located next to thriving businesses or lots of “for sale” signs? Go to open houses, walk into other stores and talk to people to get their opinions. Contact the local police department to see what the crime is like if you are unsure or feel uneasy at what you see. Finally, talk to other investors and other professionals for their thoughts and opinions. If a deal seems to good to be true, you need to wonder why.
6. Leave no stone unturned….
when looking for commercial properties. In other words, and this may seem obvious, check the Internet, the real estate listings in the newspapers. Hire a real estate agent to help you look. Ask around, visit the Chamber of Commerce, basically contact any person that you know will be helpful to aid you in your search. Take their recommendations but again, always follow-up with research once you locate a possible property.
Finally, it’s more than all of the above. At the heart of the matter, you want to make sure that you communicate and build professional relationships with business owners who can become valuable resources as you start as a commercial real estate investor. You want to make sure that current owners feel comfortable in talking with you and passing along good information and excellent advice. Establishing contacts early is a great way to ensure success so never hesitate in asking questions and following their advice.