Before venturing into commercial real estate, you should be aware that many misconceptions run rampant in the industry that keeps investors from making informed decisions. Here are some of the most ridiculous myths about commercial real estate you should see-through in your journey to acquire property for a business.
One of the most prevalent myths about commercial real estate is that it costs too much upfront. While it's true that commercial real estate usually requires a large capital investment, it's possible to get a commercial loan if you maintain good credit by sharing a marketable business plan with a bank.
There are always good deals available for commercial or residential property. It's a matter of what you decide to do with the property to make it viable. The real estate market goes through up-and-down cycles, so the best time to buy is in an economic down cycle. You can still find good deals when the market is up, provided you consider investing in distressed properties.
Due to the popularity of online real estate sites like Zillow, many investors think they can handle purchasing commercial property on their own. Nonetheless, buying commercial property requires careful and detailed due diligence that can be overly complex. An experienced real estate broker can help make the purchasing process go more smoothly. Brokers also have access to real estate deals that aren't published in the market.
Commercial real estate leasing is more complex than renting a home or apartment, which doesn't require much paperwork. The commercial side of real estate leasing requires more intense negotiations between the landlord and tenants since a business has more complexities.
All property investments carry risks, but if you know how to manage them with the right insurance, it's not such an overwhelming challenge. Learn the property's risk profile and its related leasing conditions. The key to any successful investment begins with risk management.
The exponential growth of e-commerce has made many people believe that brick-and-mortar is dead. The truth is that some big box stores have disappeared due to high costs, but many local establishments have been thriving because the internet has brought more attention to them. Brick-and-mortar businesses in high-traffic areas also still do well.
Since leasing doesn't require a 5-figure down payment, many people perceive it to be cheaper than buying commercial property. However, in some cases, monthly commercial property leases are more expensive than mortgages. Leasing commercial property still usually requires a substantial deposit.
Now that you've explored the most distorted myths about commercial real estate, look at the positive side if you have a business goal worth pursuing. Contact us at Parkwest General Contractors to learn more about the advantages of investing in commercial real estate. We will work closely with you at every step of the construction process, so you get the most out of your time and budget!