When people decide to invest in commercial real estate, they often start their search by finding commercial buildings for sale that fit their budget and are in excellent condition. But, while it’s true that your investment should be affordable and have good structural integrity, these aren’t the only factors you should consider. You must also take a look at how the commercial property will fare in the future in terms of profitability.
Why Profitability Is Important
The main goal of commercial real estate investing is to make your money increase after some time, and you won’t be able to accomplish this if you buy a property that will attract zero tenants or, worse, the wrong kind of renters. So, while shopping around for commercial buildings for sale, you should look not just at their price tag but also at their earning potential once you start to rent them out. Will they be attractive to potential tenants? Are they easy to care for, or will you need to spend a large amount of money on property maintenance? These are just some of the questions you will have to ask yourself before deciding on a property to invest in.
How to Know If a Commercial Property Will Be Profitable
While there’s no way to predict exactly how your property will perform in terms of profitability, you can increase your chances of success by choosing commercial buildings that are in the right location. For instance, if retail shops are your target market, you will want to invest in properties in high-traffic areas that can easily attract large volumes of shoppers daily.
Aside from looking at the location, it would help to ask how many tenants your property can accommodate. Generally, you’ll see a higher ROI if you invest in commercial buildings with the highest number of renters, such as office buildings, student housing, self-storage facilities, and multifamily apartment complexes. Having more tenants is preferable since it often equates to higher returns. It also gives you less stress since your income won’t be significantly affected even if one or two tenants leave.
Of course, having a large number of renters isn’t the be-all and end-all of investing. You can also invest in triple net properties, which are usually single-tenant units that come with long-term leases. These are highly recommended since the burden of paying for property maintenance, building insurance, and real estate taxes would fall on the tenant, leaving the investor with fewer things to worry about. As mentioned above, triple net commercial buildings are paired with long-term leases, so you’re assured of a steady income stream. You also won’t have to deal with the hassle of finding and interviewing new tenants every now and then.
Find the Right Property Today
Profitability is one of the key factors that you must consider when looking for commercial buildings for sale in Michigan or anywhere else. If you’re ready to start your search, feel free to contact Levi Smith at PA Commercial, LLC As a trusted and experienced commercial real estate broker, he can help you find properties that perfectly suit your needs and will help you enjoy exceptional ROI. Give him a call today!