Commercial real estate is an exciting, competitive, and lucrative industry. When investing in CRE, you get consistent returns, growth potential, and passive income- but it’s not without its cons. There are risks with investing in CRE, and it takes a particular type of person to make everything work. If you’re interested in this demanding but rewarding industry, this blog will help you know if investing in commercial real estate is right for you.
You want to work with a variety of properties.
Not all CRE properties are created equal. CRE is typically split into five types: industrial, office, retail, multifamily, and special purpose. As you might guess, the last type, “special purpose,” has many subtypes like elder care, medical, or hotel. Each type and subtype of property has different ROIs, but all will require your attention to make the investment worthwhile. If you’re up for the challenge of balancing all the different types of properties, you might be ready to invest in commercial real estate.
You want limited work hours.
In CRE, you’re typically working with businesses, not individuals, and businesses have set hours where they go home each night. Outside of emergencies like break-ins, which security companies can even handle, you usually won’t have to worry about your commercial properties after hours. If the thought of an excellent work-life balance and set hours appeals to you, commercial real estate is something you should consider.
You want professional relationships.
As we said, in commercial real estate, you deal with businesses, not individuals. Your relationship with your tenants as a landlord will be like a business-to-business relationship. If having several (or many) professional relationships with your tenants is something you like the sound of, consider investing in CRE over residential properties.
You’re ready to do your due diligence.
Buying a commercial real estate property requires a lot of research. You have to look through financials, tax returns, the previous owner’s financial statements, and other documents. You also have to conduct surveys and property inspections, and more to determine whether or not it’s a worthwhile investment. If you miss or forget anything, it could be a big investment mistake for you. When you invest in CRE, you must make sure you’re ready to do your due diligence.