Commercial real estate is a funny subject right now. What makes it funny is that the advice you see is both wrong, and right. How can that be? For example, if someone tells you that commercial real estate is a good long-term investment, they are right. However, that does not mean that it is a good investment for you right now. The reality is that where you are will have just as much of an impact on the success of your investment as what you buy and what you use it for. 

Commercial real estate, as much as residential, is about location. Yes, there are deals made every year for cheaper, less desirable property that goes to be used for farming or industrial purposes. However, for those who are focusing on things like businesses, townhomes and so forth, your focus needs to be first on where consumers would want to visit. How often do you go to stores and restaurants that are in areas you do not like driving to? That’s what you have to keep in mind whenever you research a new area. 

Your Area Is Different 

When they say location matters, 

it matters more in commercial real estate. Think of a city block, a business at one end is going to be more accessible, have easier parking or be in a better spot than one at the end of the block. Even though that’s not much distance, it does give you an idea of how different a property can be, even in the same zip code. 

You need to understand the area a property sits on. Why is it available? Will there be a demand for that area from local residents? Are there businesses you can rely on to stay there? What type of businesses can use this type of property? Is it set up for restaurants, hospitals, movie theaters or something else? If you cannot have a business take over the property and thrive, how are you going to rent it? 

Hire A Realtor Who Specializes In Commercial Real Estate 

The first and best way to get started with your research is to hire an experienced realtor. They know the options, the challenges and where you can buy based on what you want and what you expect from the property. Are you trying to turn this into passive income or is your goal to sell? You need to know what you want to do with the property before you look and also what you can do once you find the best options in your target area. 

What Is Your Goal With The Property 

Passive income is often the top goal that comes with commercial real estate. The reason for this is because it’s difficult to sell certain properties, not only because of the costs, but because of the regulations. Focusing on passive income is ideal because it gives you long-term income without having to manage a property. 

A successful commercial property will have someone managing it and ensuring quality and safety is maintained. However, your goal is to make money off the property each month without having to make managing it a full-time job. 

If you can find areas that offer this opportunity to you, it is a great advantage, especially if you can find stable and reliable businesses to rent it out. As you are looking for options, also consider where consumer demand is highest. If consumers are not going to the area now, that means they will have to be encouraged through marketing and adding the right type of companies. The more research you put into this phase, the happier you will be with the end results. 

Can You Hold It For A Year Without Renters? 

The question every realtor is going to ask you and the first thing you need to think about when looking at a property, especially if it does not have occupants, is whether or not you can afford the property without having a single tenant? Can you cover the bills for a year if that’s how long it takes to get clients in and have a successful return on your investment? If not, you may want to look at other options. 

What To Look For 

The idea is to stick with what you know. If you know how to manage a storage unit and the area is lacking them, you have an idea of what to invest in. If you know restaurants, stick with that. Often, where people lose money in commercial real estate it’s because they are investing in properties that have or rely on businesses they are not aware of. Some businesses will raise your property costs based on the services, products or regulations they have to deal with. Do your homework and work with a realtor who can help you.