The avoidable mistakes made by commercial real estate investors

The market for commercial real estate may be on the rebound after past year uncertainties attributed to the COVID-19 pandemic. As the market beckons, you – like other potential investors – explore, research and consider the available properties to add to either a beginning or growing portfolio of investments.

Along the way, you must answer some important questions. Can you make these investments by yourself with a little help from lenders? Are you eager to create investor partnerships that could lead to building an empire of commercial real estate investments? And, of course, you want to avoid any missteps. Such mistakes already have been made by other investors, and they still get made today.

Diversify, make informed decisions

What mistakes lead to a false start in commercial real estate investment and potentially set you back? Here are some when it comes to acquiring and managing properties:

  • Making quick, hasty and unrealistic decisions: Please perform your research, compare investment properties and make an informed decision. Homing in on a specific property is not a good idea. A solid tip: Enlist an asset manager with deep market knowledge who knows the properties and their investment potential.
  • Failing to diversity: Investing in an assortment of different properties balances your portfolio and reduces risk, and plenty of risk exists in the commercial real estate market.
  • Oversight? What oversight?: This represents a crucial duty in commercial real estate investments. You must have a solid understanding of areas such as maintenance costs and budget balancing. Consider hiring a property manager, but make sure this company has a good resume filled with a diverse property portfolio and that you can afford the cost.
  • Partnership conflict: In a business partnership, disagreements happen. However, some may lead to tension that causes irreparable harm. Have contracts in place detailing the responsibilities of each partner.

You made a calculated decision in investing in commercial real estate. In doing so, you understand the risk, but other obstacles – some of which you may not have thought about – exist. Preparation, knowledge and the right alliances can help you avoid potential mistakes.

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Attorney Mike Lassiter grew up in Statesville, makes his living serving the people of Statesville and published a book capturing the changing landscape of small town life across North Carolina and Iredell County. His keen sense of history, dedication to the area and 30 years of legal experience make him an ideal attorney for your legal needs.

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