Real estate can be one of the most lucrative businesses that you can start. If you have an entrepreneurial spirit, then this is the right business for you. You can achieve financial freedom through a real estate business and one of the more common types that you can invest in is commercial real estate.
A commercial real estate is non-residential properties that are used for business purposes in order to make a profit. This may include malls, restaurants, offices, warehouses, hotels, apartments and industrial parks to name a few.
As with any other investments, one should have the proper knowledge about what you are getting into. If you have done your due diligence and study, then making a lot of money is a huge possibility. Look for mentors and ask them how they did it, you don’t have to reinvent the wheel. There are a lot of real estate success stories that you can just duplicate in order to succeed.
Experience is not needed for success. If you have a good coach and you are armed with the right knowledge, there is no reason for you to fail. All of those who have made it big in this business started with no experience at all and they were able to build their empires over time.
Those who fail may be largely because they have not done the things that we have mentioned above. There is always a risk when it comes to investments, real estate is no exception. Having the money to invest is not enough for you to succeed.
Before we get started on your real estate journey, we share with you some tips on how to start with a small investment in commercial real estate.
Benefits Of Making Small Investments
People have this idea that when you enter into the commercial real estate business you have to invest heavily at the beginning. This is due to the properties that come to mind when we think about the different types of commercial properties, they are all huge properties.
Starting small, even for those who have the money is a wise decision. It will lessen the risk you have as compared to going all in and investing big when you start.
Real estate experts would discuss the natural progression for commercial real estate investors. First, they start off with small deals then once this stabilizes, they move on to medium-sized investments, then end up with larger deals.
An example of a small deal will be a 5 to 20 unit apartment building, with around 280 square meters floor area. This is more affordable for first-time investors and the risk is a lot less. There are also a lot more choices when it comes to smaller investments.
Small investments can be profitable and it’s up to you to choose if you want passive income for a long period or a one-time commission from a resale.
Be on the lookout for commercial properties for sale that have good locations and have a high potential to earn more with a little refurbishing. Buying and doing house flipping can be applied or you could just keep the property and earn rental income. Rent can be increased as soon as you make the needed improvements to the property like painting and coming up with needed repairs.
Once you are done with the renovations and have increased the rent to market standards, you now have a choice to either sell the apartment building for a profit or hold on to it and get passive income for a longer term which can help you invest in more properties and duplicate the same strategy. This will also help in setting you up for retirement. Not having to rely on your children for dole outs when you reach retirement age will give you peace of mind in your golden years.
Choosing the passive income over one-time profit seems like a better decision for long-term security. Land is an asset that does not reproduce so we only have a limited amount of it. This is the reason why holding on to it would surely give you an asset that will appreciate in value as time goes by.
The rental property on your land can either be maintained or demolished in order to build a new one, the possibilities are endless.