For savvy investors, the real estate industry can provide consistent earnings potential. If you are interested in the commercial real estate in your area, it’s important to consider your options carefully. Once you find a few potential properties, consider the following tips for evaluating the investment and making a choice that will carry long-term benefits. 

How to Evaluate a Potential Commercial Real Estate Investment

1. Research the Market

When considering a commercial property, you want to know how it compares to other properties in the market. To effectively research the market, take the time to tour multiple properties, note online listing prices, and learn what industries are up and coming in your region. This can help you evaluate a property’s worth and negotiate when it comes time to put in an offer. Prior knowledge can also save you time when competing with other investors, as your research will already be done.

2. Work With an Expert

Even though independent research is helpful, expert knowledge is a must. Find a local agent who specializes in commercial real estate to guide you through the investment process. They can help you understand which properties are worth your interest and how you can compare various options. They may also have valuable contacts with commercial property managers.

3. Estimate Income Potential

Commercial real estate has an annual return of about 6-12%, which compares to 1-4% for residential properties. It’s essential to take this earning potential into account when evaluating properties. You and your real estate agent can estimate your earning potential on a certain property, taking maintenance costs and other expenses into account. You can also consider how long you anticipate a tenant remaining in the building and which type of lease is appropriate for the property. These factors will impact potential earnings over time. 

4. Know The Investment Risks

As you assess the overall earnings potential, consider the ownership risks as well. Research similar properties in the area and note tenant turnover and average renovation costs, as these can lower your profit. You should also consider how many people will be moving through the property daily, including employees and customers. The more people are present in the building, the higher the risk of damage. Your real estate agent can help you consider other common risks for the type of property in question.

Ready to invest in commercial real estate? Crest Commercial Realty has more than 50 years of experience helping clients in Centerville, OH, fulfill their investment potential. From property analysis to budget development, they can help industry professionals and newcomers effectively buy and manage their properties. Their intuitive database of listings can also help property owners find the right tenants. To view a full list of services, visit them online. You can also call (937) 222-1600 to speak with a member of their team today.