Real estate investment is consistently one of the best and most reliable ways to grow your wealth. Commercial real estate, in particular, is full of opportunities: most estimates put the total value of US commercial real estate at $16 trillion.
If you’re looking to diversify your portfolio and get your feet wet in commercial real estate, it pays to know as much as you can going in. Here are some basic tips to get you started.
Monitor Revitalization Trends
The controversial “broken windows” policing theory posits that minor urban decay – graffiti, for instance – invites future criminal activity. With commercial real estate, the opposite applies. Let’s call it the “renovated windows” theory: minor improvements in an area can signify future large improvements, and subsequently appreciating property value.
A popular trend in many cities is to revitalize run down or vacant areas, particularly former industrial zones. Getting in on the ground floor of these projects can yield massive returns.
Established cities aren’t the only source of good properties. Let’s use Cary, here in the Triangle, as an example. Once a sleepy bedroom town for Raleigh and Durham, growth in the region at large triggered a massive population surge in the 1990s. Cary is now one of the most populated – and valuable – areas in the region.
When choosing properties, consider this relationship between urban cores and surrounding areas. Growth in one can trigger growth in another, and those surrounding areas can have a much lower buy-in cost.
Research, Research, Research
This may seem obvious, but it bears repeating: when buying a property, do as much research into its history as possible. This is especially true when investing in those hot former industrial properties we mentioned above: subject to years of decay, certain properties can quickly turn into a money pit. This is especially true if the property was formerly used to manufacture hazardous materials.
Even with less obviously dangerous properties, it’s good to research tenant history, the neighborhood, and previous owners. This can tell you a lot about risks and investment potential.
Looking to start investing in commercial real estate? Insight Property Group can connect you with the best listings in the Triangle. Our agents can also represent you and assist with investment and development. Contact us today to get started!