Ever since COVID-19 hit, interest in investing in a commercial property has been on the rise. If you’re one of these investors, there are a few complex market arrangements you need to be aware of before you take the leap and invest in commercial real estate.
Luckily for you, in this blog New England Commercial Brokerage is covering all the factors you need to consider when you’re buying a commercial property.
1. Yield
For an investor, it’s imperative to consider the future yield their asset will generate regardless of its kind. The growth rate of capital in commercial real estate isn’t as high as in the residential market. Because of this reason, it’s vital you know your property’s yield to know its actual value. These future returns will help you determine if you should select a specific property or not.
Several seasoned investors state that a property’s yield is more important than its price itself!
2. Demographics
Being familiar with the demographical changes of a location is vital when you’re selecting a commercial property. Specific variables that affect the property you’re interested in usually change with the passage of time. Some make your commercial real estate property more desirable, while some affect the value adversely.
Some important ones you need to consider are:
- Is public transport easily accessible?
- Are there any businesses around that support leases?
- Is the location preferred by potential tenants?
Additionally, it is also crucial you consider the future developmental plans within the vicinity that can impact your investment.
3. Interest Rates
As inflation rises, the cost of money rises with it. This impacts a company’s growth rate because an increase in the interest rate leads to decreased consumer demand for a property. This fluctuation of interest rates changes the price of commercial real estate accordingly. When the interest rate decreases, the market becomes favorable for investors, and it can be a good time to acquire a property then!
On the other hand, when the interest rate increases, there aren’t many incentives available for grabs. That said, there are a few strategies you can use to predict the interest rate. Stronger economies usually have higher rates, but it’s important you stay in touch with the news to know of any potential investment opportunities.
4. Different Kinds of Properties
Buildings, medical centers, farms, retail shops, warehouses, etc., are all the different kinds of properties you can invest in when you’re considering your options. However, coming under the commercial real estate umbrella does not mean that all of these investment options are affected by the same variables. Due to this reason, it’s important you know the kind of commercial property you’re looking for before you start splurging.
Wrapping Up
The factors we listed above are just some of the factors you need to consider when you’re buying a commercial property. It can be incredibly difficult for an investor to consider every single one without the help of a commercial broker. Luckily for you, New England Commercial Brokerage has got you covered!
As of now, we are licensed in:
Georgia,
Massachusetts,
New Mexico,
New York,
Rhode Island,
Tennessee,
Utah, &
Virginia
We use cooperative brokers in places where we are not licensed to stay in compliance.
Call us today on 860-648-1600 to get started!