Investment and Commercial real estate can make a lot of sense for people who are looking to build generational wealth or retirement strategies for themselves and their families. However, when you are choosing to make any investment, there are several key factors that you will want to keep in mind. These include
1. Motivation: What is your reasoning for investing? Having clarity about your WHY will make your decisions easier when you get to the point where you seem stuck.
2. Cashflow or Long Term or Flip? Are you a cash flow investor looking to have a nice monthly cash flow from your investment or are you going to hold for the Long Term and look to have increased value in the property? Perhaps you are the flip type investor who is going to fix up the property, fill it up and flip it? Understanding your exit strategy and length you are planning to hold the investment is something that you should do before you put any money into play.
3. Location: Look for a property in a desirable location with high demand for rental properties. A location with easy access to amenities like schools, shopping, and transportation can attract potential tenants.
4. Property Condition: A property in good condition will require less maintenance and repair costs, which will help maximize your return on investment. Get a professional inspection done to identify any potential issues before making an offer.
5. Rental Income Potential: Look for a property that has a potential for good rental income. Research the average rental rates in the area and compare it to the asking price of the property. You can also calculate your return on investment (ROI) to ensure that it meets your financial goals.
6. Tenant Appeal: Consider the type of tenants that the property would appeal to. If you are targeting families, look for properties with multiple bedrooms and a good school district. If you are targeting students, consider properties that are close to universities or colleges.
7. Financing: Look for financing options that fit your budget and long-term goals. Evaluate your cash flow to determine how much you can afford to pay for the property, taking into account expenses like property taxes, insurance, maintenance, and repairs.
Having clarity about your purchase and the factors that are affecting the future value of your investment are important. Without a plan you are going to feel overwhelmed and probably struggle to find the right investment for you.
Free Opportunity Analyzer: Having criteria for making any business decision is important. Having criteria for investments is crucial. If you would like a pdf of a tool you can use to help you determine if your next commercial or rental purchase makes sense for you, email dave@businessrealtor.ca and I will be happy to fire you off this tool.
David Fuller, MBA, is a Licensed Business and Commercial Realtor with Team Powerhouse Realty Ltd. Dave is also an award winning Business Coach and the author of several books. Email your investment question to dave@businessrealtor.ca
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