Investing in commercial real estate can be a very lucrative venture. However, it’s a mistake to enter into the commercial real estate realm without really knowing much about it. Even if you have experience investing in residential properties, it’s vital to note that commercial endeavors are vastly different and require a distinct approach. The real estate experts at EXIT Realty of the Carolinas work closely with Mount Pleasant, SC, entrepreneurs who are hoping to increase their investment profits and professionals looking to develop successful careers in real estate.
These are some of the most important points that the company teaches investors when it comes to commercial real estate:
- Commercial Real Estate Is Valued Differently From Residential: The first thing that must be understood is that commercial real estate is valued according to the amount of square footage available, while residential properties are largely valued based on the comparable sales of similar homes in the same neighborhood.
- A Successful Investment Requires The Right Property: It’s essential for investors to do their research to figure out what kind of space businesses would find to be the most desirable. This is the best way to keep vacancies to a minimum and reduce turnover rates. Location, expansion potential, and zoning laws are top factors to consider.
- Down Payments Are Generally Higher: When getting a loan to purchase a commercial property, it’s good to know that most lenders require at least 30% for the down payment. This is much higher than what’s expected for a residential property, so having a financial plan in place is imperative.
- It’s Usually Best To Stick To A Niche: Many investors find that they do much better when they stick to a particular commercial sector that they are already educated in. It helps significantly to gain some awareness about a market before diving into an investment in that area.
- Learning Percentages & Numbers Are Vital: As a commercial real estate investor, it’s critical to learn all about profit and loss, cap rates, net operating income, and loan to value ratios. All these percentages and numbers will directly relate to the efficient operation and profitability of a property.
If you are interested in learning more about the fascinating world of commercial real estate, contact EXIT Realty of the Carolinas at (843) 343-3947. Visit them online for more valuable tips and resources.