Making an investment in commercial or industrial real estate is a big decision, and a wise first step is to seek the expertise of a qualified, experienced professional. You may feel clear on the size and space you’re after, but there are many other considerations and decisions to be made. It’s likely that your real estate professional will address important subjects that have yet to even occur to you, but demand attention all the same. Here are ten critical considerations in a commercial property transaction that will require your attention.
10 Critical Considerations
- Investment alternatives: Is this investment the smartest use of your economic resources? Are there higher returns or less risky alternatives available that make more sense?
- Ownership entities: There are multiple options with their own benefits. Do you know how to differentiate them and determine which best suits your needs?
- Tax considerations: Understanding how your federal tax code will affect your investment makes room for better planning to minimize your tax impact. Is this something you can competently navigate on your own?
- Financing: There are lots of options, with varying interest rates, terms and conditions. Can you find them, and decide which option is the best for you?
- Funding: This topic addresses your financial leverage versus how much of your own cash is invested, plus the benefits of each alternative. Is this something you can navigate solo?
- Risks: The importance of fully understanding the risks involved before you own any investment cannot be overstated. Can you identify and weigh these without professional assistance?
- Length of hold period: This impacts multiple decisions you will make during your ownership and needs to be planned in advance. Do you know what’s best for your deal?
- Disposition: This is a widely ignored topic that has significant impact on the selling phase of the investment. Don’t make the mistake of overlooking it, and consider carefully if you can manage it without assistance.
- Investment performance projections and measurement: To be successful, you’ll need a plan for your invested resources that helps you reach your financial goals and monitors your track record along the way. Can you create and execute a plan like this?
- Tax deferred exchanges: This is a well-known way to swap properties, but you must be clear about the numerous regulations necessary to qualify and avoid potential problems. Are you capable of doing so?
If even one of these topics is unfamiliar, consider that a valid reason to consult a professional. Each of these considerations plays a significant role in any commercial property transaction, and any of them could have a huge impact on your real estate investment performance. Fortunately, an experienced real estate agent can guide you through them all.
If any or all of these topics are subjects you’d like to discuss further, we welcome the opportunity. Please contact us directly today.