Investing in Phoenix commercial real estate, so say some property owners, may be a better investment that residential real estate. These property owners laud the merits of additional cash flow, the beneficial economies of sale, and the abundant market for good, affordable property managers. They also say that commercial real estate offers a bigger payoff. While this could be be true, we believe that, no matter what kind of property you’re considering, the key to getting a good deal is making wise decisions with your investments.
But, how do you evaluate the best properties to invest in? Here are some tips to follow when you’re looking for a good deal:
- Know the “inside business” of commercial real estate. To find success in the commercial real estate market, you need to know that commercial property is valued different that residential. For commercial property, income is directly related to its usable square footage whereas residential is not. As well, commercial property leases are longer than on single-family dwellings, so it allows for greater cash flow. Another important tip to know, especially if you’re in a tighter credit environment, is to make sure you have cash in hand when you’re ready to buy. Lenders seem to be more agreeable if you have a sizable down payment.
- Have a Plan. It is critical to know your parameters when investing in commercial real estate. For example, you need to know how much you can afford, how much you expect to make on a deal, how many tenants are already paying rent, and how many vacancies you would need to fill.
- Recognize a Good Deal. The experts in commercial real estate investing can spot a good deal when they see one. Gut instinct? Maybe. But they also have a strategy that helps them to get what they want. Part of that strategy includes knowing that the best deals are the ones where you know you can way away. It also helps to have a sharp eye for such things as damage that requires repair, to be able to assess risk, and to ensure that the property meets your financial objectives.
- Find Motivated Sellers. The idea here is to find someone who has a pressing reason to sell below market value. Bottom line? A seller who is not motivated to sell will not be as willing to negotiate with you.
- Enlist the Support of an Expert. Having a professional who knows the commercial real estate industry at your side will make all the difference in the world. Going it alone rarely makes sense. Having proper representation not only works to your advantage, but can also help you in your search for a great deal.
Our agents at the Menlo Group have extensive experience in helping investors find great deals on Phoenix commercial real estate. Interested? Then, give us a call, and let’s talk. We know the Phoenix commercial real estate market, and we would love to help you find that great deal you’ve been waiting for.