Tips for Investing in Commercial Real Estate

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Investing in Commercial Real Estate

Commercial real estate can be a great investment if you approach it in the right way. If you have never invested in commercial real estate before, here are some tips to get you started.

Perform Your Due Diligence

If you find a property you want to invest in, be sure to perform a complete analysis of the property before you decide to take out a commercial mortgage Livonia MI and purchase it. You should develop a due diligence checklist to evaluate all potential real estate investments. If you are just starting out, talk to other commercial real estate investors to get a feel for what items they consider important to check into before purchasing a property.

Focus on One Investment Type at First

There are so many different types of commercial real estate: retail, offices, apartments and more. It is hard to be an expert on each type, so focus on only one type until you have learned all you need to know about it. It is better to be an expert in one area than to be a beginner in a lot of different areas.

Calculate the Return On Investment

You want your investment to be profitable, so you need to calculate the return on investment that you will receive. The return on investment is calculated as a percentage. You would subtract your annual costs for the property from the total annual rent you are getting and divide that figure by the value of the property. This will give you the net yield, which should be at least 7-10% in order to be considered a good investment.

These tips should help you to get started on your career of investing in commercial real estate. With some guidance from others who have already done this, you will be well on your way to an exciting way of life as a real estate investor.