Commercial real estate promises enormous profits to savvy investors. Returns are much higher here than in the residential sector, and property maintenance is lower. These points prove to be attractive to new investors. However, the amount of capital and time commercial properties demand is prohibitive. Any investment decision in this area should always be carefully considered and backed by thorough research and extensive knowledge.
Future trends and demand
If you want to reap the most income potential from your investment, the demand for your property should always be high and should sustain itself in the long term. Acquire a fine understanding of the local market and the property’s immediate area to better gauge prospects that will most likely fulfill those criteria. Don’t forget to account for competition from similar properties in the vicinity and any legislation that may boost or limit your investment’s growth potential.
Location and asset type
Any real estate venture requires a serious evaluation of location as part of due diligence. In commercial real estate, asset type follows at the heels of location, because location alone won’t guarantee the success of an investment. A promising location may be a terrible spot for a strip mall but can be the perfect space for a self-storage facility. Since pairing areas with the optimal commercial types takes experience and expertise, hiring a commercial real estate agent will help you make smarter and more profitable investments with less overall risk.
Patience is a virtue when investing in commercial real estate. Permit approvals that only take days for residential properties can take up whole months for commercial properties. It is a known fact among veterans in the business that property development of this nature regularly spans several years from start to finish.
There’s also the added importance of hiring a highly experienced developer with a portfolio of past projects in the desired asset class. The quality of their work has the power to curb profit potential if execution is less than adequate.
Investment compatibility and risk
As with any endeavor requiring large capital, you need to recognize your own motivations and comfort zone. Think of your responses to these questions and use them as your basis for making decisions:
- How much risk are you willing to tolerate?
- Does the venture complement your investment approach and goals?
- What contracts and guarantees will be in place to protect you from significant losses (especially those brought about by third parties)?
- Are you willing to be a hands-on investor to maximize profit potential?
Once you’re prepared to buy into commercial property for sale in St. Louis, get in touch with Cardinal Realty Group. Call us at 636.225.0385 or send an email to Hal(at)CardinalRealtyGroup(dotted)com. With more than 35 years of experience in commercial real estate, we will guide you through a variety of commercial investment options in the St. Louis, Missouri area.