Commercial Real Estate Investments: Maximize the Upside Potential

How can commercial real estate investors maximize the opportunities they find in the market?

In Part 1 of this series we covered getting started in commercial real estate investing. In Part 2 we dove into learning the landscape and comparing investment opportunities. The last installment revealed some strategies and tips for selecting the best matching commercial properties for your personal portfolio. Now let’s look at how to maximize those acquisitions…

6 Ways to Get More from Your Commercial Property Investment

1. Financing

All opportunities are only as good as the execution. In real estate that often relies a lot on financial structuring. Using financial leverage can have many advantages, even if you can afford to pay all cash. The terms of that financing will make a significant difference in net cash flow, returns, and your happiness with your investment. Always keep an eye out for ways to optimize this over time.

2. The Take Over

The actual acquisition and transfer of control of the property is an often overlooked, but extremely important event. This is a period which can either provide a smooth and profitable start, or kick it off with a kick in the shins. Tenants should be prepared in advance, management should already be involved before day one, units need to be secured and protected, bookkeeping needs to be lined up, and final walk-throughs and inspections before closing should never be neglected.

3. Property Management

The truth is that little else matters as much as the daily property management. The most fantastic properties and deals can be driven into the ground very quickly with subpar management. While even mediocre deals can become major wins with expert and efficient management. Know who will handle your properties in advance, and hire the best you can get.

4. Make Value Add Moves

One of the best benefits of real estate investment, and a particular advantage in the commercial space is the ability to control the performance and value of your own assets. This may be as simple as better positioning and marketing. It could be shaking up tenants and leases. Or it can be as advanced as adding more square footage, and developing the property with a different use.

5. Save on Taxes

Taxes easily make the biggest difference in your true net returns. Look for tax saving tools and structures, and get a great accountant in order to preserve thousands of what you should be keeping in your pocket each year.

6. Exit

You can’t really count your net gains until you exit. You should have this planned before you get in. This may be selling the property to exchange it for a larger and more expensive one, or it could be refinancing to tap accumulating equity and recouping your initial capital to scale and expand into additional properties.

Ready to get started in commercial real estate investing? Contact your Yellowtail Commercial Realty expert today…