There are plenty of myths floating around about investing in commercial real estate. Would-be investors are told all kinds of stories about commercial investments. I believed some of them when I started out investing, but experience has shown me that many ‘facts’ about investing in commercial real estate are actually fiction.
So, let’s bust some of the common myths about commercial real estate. Not only will it help give you the confidence to begin investing, but it will prepare you to choose your location and property for better returns.
Myth: It Costs Too Much
A common belief about commercial real estate is that it costs a lot to get involved. People tend to think you need millions of dollars just sitting around in the bank if you want to get involved in commercial property.
Of course, if you want to buy a mall or a skyscraper, it’s going to cost you a lot of money. However, this doesn’t apply to every investment, and these types of properties are probably not going to be your first commercial venture.
There are many different types of commercial buildings you can invest in. Remember, you can always invest in smaller commercial spaces to start out. A retail complex or even a single shop within a complex is a commercial investment that doesn’t necessarily come with countless zeroes.
If you really have your heart set on a larger scale investment and you’re worried about having enough capital, there are options for you as well. You can partner up with others, get funding, or invest with a developer. If you are going the financing route, just be prepared with a professional presentation for a financial lender that shows the potential profit of your investment and how you intend to be successful in generating income.
Myth: It’s Too Risky
There are risks associated with every investment you make, but commercial real estate isn’t necessarily a riskier endeavor than any other type of investment. The important thing to remember here is that with property, you can actually have a bit more control over your risk. You can assess the degree of risk and how to mitigate it right from the start based on a few important factors.
Myth: It Takes up Too Much Time
If you think a commercial investment is going to be an absolute pain in the neck and take up all of your free time, you’re not alone in believing that myth. Commercial investments do tend to be larger in scale, so it might seem like you’ll need more time for maintenance and management. However, if you plan ahead when you invest, you can help diminish the time you spend on basic upkeep and management.
Remember this; you’re an investor, not a property manager. So when you invest in a property, put in the time to set up a system in your building or space. You can hire a property manager to deal with the day-to-day issues and maintenance, a contractor to look after repairs and renovations, and a real estate agent to help find tenants. By outsourcing and building a team around your investment, you can save time and money on maintaining your property.
Investing in a triple net lease is an attractive option that saves both time and money. I’ll be discussing the in’s and out’s of triple net leasing in an upcoming blog.
Hopefully I’ve managed to alleviate some of those fears you had about commercial investments. Overall, commercial investing isn’t as scary or risky as the myths make it seem. In fact, it gives you an exciting and profitable new way to invest! For more information, get in touch with me personally. I’d be happy to answer any questions you have, and even bust more myths for you!