Are you looking to invest in commercial real estate? Doing so can be a great way to build wealth. Investing in commercial land has a reputation for providing some of the highest income streams of any investment opportunity. Prospective investors need to understand the practicality – as well as the risks – associated with owning commercial land. The six tips below can help you make a good choice.
Mullen Holland & Cooper P.A. is a full-service real estate law firm based in Gastonia, North Carolina. Since 1950, our firm has been helping clients with a variety of commercial real estate matters, everything from the purchase of land to the sale of property. We are ready to do the same for you.
Our highly skilled and experienced Gastonia commercial real estate attorneys can help you with all the important legal aspects of your real estate project. If you are considering investing in commercial real estate, you should talk with our knowledgeable attorneys to make sure that your transaction is designed in a way that’s most beneficial to you.
1. Know your market.
An old real estate industry adage, “know the market” means learning as much as you can about the area before you invest in commercial real estate in that area. Every area has its own unique characteristics and supply and demand. Before you make a purchase, you will want to thoroughly investigate the market to determine the needs there, as well as the investment’s chances of success.
Consider the type of improvements you would be willing to make to the commercial property. You can also risk entering a saturated market if there are many similar properties currently on the market. Look for types of properties that appear underserved. These properties are usually more in demand than the typical property and have the potential to produce big returns. Don’t overlook doing further research in regard to the potential for future growth.
2. Buy land with potential for growth.
Land is a limited resource, which is one reason why it’s often a good investment. Because there is a limited supply of land, you may want to for land in off-the-beaten-path that’s a good value with room for growth. Consider buying land in the direction of a city’s expansion. Buying land in the path of future development puts you in a position to sell it for a profit in the future.
3. Get approved for a loan.
If you are going to take out a loan to buy commercial land, start asking about financing before you look for available parcels. Do your homework in terms of finding out as much as you can about local, state, and national banks and lenders who give commercial real estate loans. You should also be aware that with the commercial lending process, the qualifications are more stringent than they are for residential properties.
4. Consider the risk factor.
With any investment, there is a degree of risk involved. Commercial land investing is no exception. Before you buy commercial property, it’s important to consider all the potential risks.
Be prepared for the chance of months without rent payment. There’s also the chance that tenants do not completely occupy your commercial property.
5. Evaluate the suitability of the property.
Many commercial property investors run into problems after buying the commercial property. Consult with the local authorities about the suitability of your property. Ask a licensed commercial real estate agent about the traffic situation in the area and the crime rate. Determine the area has any overlay zones as well. Make sure your property satisfies all building codes.
6. Understand that every property has a lifetime.
The reality is that you will have to spend money on the upkeep of the building over time. The building may need a new air conditioning system or a new roof, for instance. It’s important to have a long-term plan to handle repairs.
Contact a North Carolina Real Estate Attorney
Over the past 70 years, Mullen Holland & Cooper, P.A. has built a reputation as one of the premier law firms in western North Carolina. Our firm has been awarded an “A-V Preeminent” rating by Martindale-Hubbell, the leading rating service for lawyers in the United States. Our North Carolina commercial real estate lawyers are prepared to help you with all your commercial land investing needs. Call now for a confidential consultation.