5 Most Important Factors When Purchasing Investment Real Estate

5 Most Important Factors When Purchasing Investment Real Estate

Are you interested in purchasing commercial real estate but need guidance on where to start? The first step should always be setting a clear investment goal. Whether your goal be buying the property solely as an investment, an investment as an owner-user, or an investment as part of a 1031 exchange, the team at SVN Vanguard can help you help find the ideal property.

Once you’ve narrowed down your goal and before jumping into your investment, we can’t emphasize enough the importance of doing your due diligence. We are here to help, which is why we’ve narrowed down our TOP 5 tips for purchasing the right investment property.

1. Location

The old saying, “Location, location, location.” plays a huge factor in this scenario. Location is of utmost importance when buying an investment property. Before signing a contract, always make sure to consider the neighborhood, visibility, traffic drivers and overall ease of access. Will forecasted demographic trends be attractive to tenants?

2. Growth Projections

Are you familiar with the projected growth trends in the area you’re considering buying in? This is just another reason to to get counsel from an SVN Vanguard commercial real estate advisor who is experienced and knowledgeable about the trade area. A buyer should choose an area where demographics are stable or growing. Give thought to which new businesses are moving into the area. Are there any changes coming in terms of transportation or road systems? Since these items affect property values for better or worse, it’s crucial for a buyer to become familiar with them.

3. Property Inspection

Physical inspections are a must when purchasing commercial property, or any property for that matter. Inspections of the roof, mechanical systems, plumbing and structural integrity of the building play a big role when buying property. Performing a Phase I Environmental Site Assessment is crucial. The assessment will tell you if previous uses of the property are threats to the environment, help find the true property value and signal potential liabilities to come.

4. Tenants

In many cases, investors look for properties that are fully leased. If you are looking to purchase a fully leased property, consider the reputation of tenants already leasing at the site. The general public’s perception of a business can sometimes say a lot about the business owner. Also, it’s never a bad idea to look into a tenants’ cash flows and the growth projections for their specific industries. One thing to also consider is whether the property and surrounding community would benefit from new tenants that could help the area thrive and bring more traffic.

5. Flexibility

When purchasing an investment property, a buyer needs flexibility. In the event that a tenant can’t make rent, the surrounding area changes, or something else doesn’t go to plan (i.e. financial shutdown, pandemic, general disaster), you need options. In these situations, it’s crucial to have an SVN Vanguard commercial real estate advisor help you navigate your path ahead.

Commercial real estate is a great investment that can diversify your investment portfolio and bring you additional cash flow. Follow these tips to make sure you get the most out of your investment and contact us for any commercial real estate needs. We provide industry-specific service across a variety of asset classes.

Considering buying investment property in Southern California? We are experts in San Diego and Orange County commercial real estate. We can help.

Are you a lessee? SVN Vanguard can also help you find San Diego and Orange County commercial real estate for lease. Contact us for more information.

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