Over the years I’ve been asked many times what should I consider before getting started with commercial real estate investments.
The following are my recommendations to plan your strategy for commercial real estate investment.
- Set your own goals, for example: “Do I want to live off my passive income derived from this property or use the extra cash flow for vacations or personal non-essential items like jewelry or accessories etc.?
- Are tax benefits, like depreciation, an important consideration for your commercial real estate investment income property strategy?
- What is your Risk/Reward tolerance level? Conservative, little risk of losing principal or a RISK TAKER, an investor with a taste for Higher returns?
- How much initial capital or equity do you want to invest in a typical commercial real estate investment income property? Is this going to be enough to purchase a quality asset?
- Do you want to diversify or just place the majority of your money into one investment property?
- What is your OWN expected cash on cash return for the equity provided and your overall internal rate of return (IRR), when you decide to sell or trade (1031) into another property to avoid paying a capital gains tax on any profit you my derive from the sale?
- Are you intending to be involved in management issues or just want a check in the mailbox each month without getting involved in the day-to-day operations?
- Visit Westwood’s website and read the various essential articles and blogs designed to take the novice or pro by the hand and illustrate the many options that you may have for commercial real estate investment income property.
- Speak with a real estate professional advisor, ask questions and feel comfortable with the advisor and then move forward while sticking with the professional until the entire process comes to an end.
- Select a mix of properties or single asset to complete your appetite for commercial real estate investment income property, whether triple net retail, office, warehouse, medical, apartments, student housing is your niche market!