Before you invest in any commercial or industrial real estate, be sure to have all the information you need to make the buying process smooth and fast. We all know that commercial/industrial properties are one of the best in terms of generating long-term income, and also, they are reliable compared to residential properties.
There are many people who build wealth through industrial real estate investment. For example, Cyrus McCormick is one of those wealthiest individuals in Chicago who have just invested in commercial property. He has grown his wealth to huge proportions by buying commercial real estate and investing in them.
Though commercial properties are reliable, as an investor, you should understand these properties, their values, and market ratings before you invest in them. You should know several important things to achieve the highest ROI. Before you choose the investment, make sure you have asked yourself some important questions.
Questions to Ask Yourself Before You Invest
- Are You Looking for Cash Flow or Just Appreciation?
There are two things that investors hope for commercial real estate investment- cash flow and value appreciation. In some cases, properties with a high ROI can create good value through appreciation and cash flow. It is good to know whether you plan to gain a strong ROI through cash flow or appreciation value. This difference affects the type of property you choose. There are both pros and cons of both these investments.Cash flow investment helps in generating regular rental income. If you use a loan or want to have a cash flow investment, you have to find a commercial property that will bring rental income more than the monthly payments and maintenance costs. You have to research current local market rates on rents and thoroughly understand the property where you are investing. Cash flow investment is convenient, but they are hard to find.
- How Much Risk Tolerant You Are?
As said before, commercial real estate is reliable; there are also some risks involved. Therefore, it is crucial to know how risk tolerant you are before investing. For example, if the market goes down for a while, can you remain floating financially and wait for the market to recover again? If you cannot support yourself during the time of market downturns, you will consider low-risk investment properties. Both high risk and low risk industrial real estate investment opportunities are available so hence, check your tolerance before investing.
- Do You Need Liquidity in Investments?
Real estate is one of the least types of liquid investment you need to know. If you are worried about having your money tied up for several years to come, you can choose a more liquid investment than commercial property. Investing in stocks for instance is a much more liquid investment.
- How The Zoning Regulations Affect You?
Investing in real estate involves knowledge of zoning regulations in the area surrounding the property. Zoning regulations will impact the investment by determining how you can use the property. For example, if you are buying mixed-use real estate that combines both retail and residential properties, you will have to know the zoning rules. After checking the zoning regulations in the area where you are investing, you should better understand how you will further use the space and how it will affect your finances.
Are you still thinking of investing in commercial real estate? You should ask the above questions first yourself and then think about whether you are ready to invest or not. Wealth BCI is one of the best investment companies that deal with commercial property investment. It helps individuals buy, sell or rent commercial properties to generate passive income.