By Steve Peterson
T
he real estate market is growing in all dimensions. Much like residential property investment, so is commercial investment value appreciation. Oakland has become an industrial market with numerous investors wishing to start up commercial investments. Any investor in Oakland looking forward to starting this type of real estate has the advantage of receiving steady cash flows, experiencing lower vacancy risks, always having readily available tenants, and increased income potentials. Although a highly lucrative type of investment, commercial real estate comes with risks, especially for first-time investors who are beginning to diversify their portfolios. However, WWW.THEPOWERISNOW.COM
WHAT ARE THE BEST FUNDAMENTALS? Firstly, understand the various transactions –the investor should determine if the potential commercial property meets their financial goals and criteria. For example, a commercial property may have low monthly cash flow; this should not make an investor go for the property with higher cash flow but more risks. Also, the value-added properties differ, and investors should first consider the costs of renovations, improvements, and deferred maintenance needed. Similarly, investors should consider the likelihood of appreciation for that particular property. The possibility of that commercial property to appreciate in future, the better. Multi-family investment strategy – typically, this commercial property has cash flows with high occupancy rates and low expenses since most expenses are covered in the rental rates earned and units are leased at or above the market rates. However, investors should determine how much operational costs they will need on maintenance and renovation to know if they will rent the property with low or higher rental rates. l
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8 Fundamentals of Commercial Property Investing For Beginners
with the appropriate strategies, it becomes easier to earn more returns on the investment.
