Expert Article Draft

The Benefits of Commercial Real Estate Investments:

The Challenging Process of Purchasing, Remodeling, and Leasing a Commercial Building

Many people strive to fulfill the American Dream.  One way of satisfying the American Dream is to purchase and invest in real estate.  Although the recent economic crisis has forced many people away from the field of real estate, many ambitious risk takers have chosen to pursue real estate because they strive for the kind of success available through real estate investments.  Indeed, commercial real estate is an attractive field that requires determination, expertise, and the ability to follow proper steps, but it can often reward investors with large profits.  By making smart business and investment decisions, a knowledgeable and experienced investor is able to make a large profit by taking advantage of the low property prices available resulting from an economic crisis.  An investor should spend numerous hours looking for the right building to invest in and purchase, consult with various vendors and professionals during the remodel of a building to succeed in attracting a large clientele, and choose a well-known broker or agent to advertise and market the vacancies of the new remodeled building.  Purchasing the building is one of the most difficult parts of a commercial real estate transaction because the right location plays a significant role in the success of a building.  Remodeling the building is also a difficult task, and is often the phase when outside expertise is needed.  Remodeling usually takes the most amount of time of the three phases because there are various aspects that go into a remodel.  Lastly, and often the simpler part of the three phases, is searching for and finding tenants to lease out the newly remodeled units.  Undoubtedly, the commercial real estate field can be a difficult field, but the investment brings the kind of large profits that more than exceed the risk.  

An investor’s expertise and knowledge is tremendously impactful when it comes to assessing and acquiring the right building to invest in.  Often, one must truly educate themselves as to the finances that are involved in the purchase of a building.  Although some investors purchase buildings strictly with cash, it is the norm to get a loan in order to finance the purchase of a building.  Once a loan is able to be secured, an investor will search to acquire a building that, after completion, will render large profits.  Commonly, the process of finding the right building can take years because of the numerous factors involved.  Some key factors investors take into account is location, population surrounding the building, demographics of citizens who reside next to the building, and the age of the building.  When financing and location is secure, the investor can move forward with the purchase of a building, which involves going into escrow.  In escrow, money is exchanged for the deed; however, the process is a bit more difficult than a simple transaction.  During escrow, an investor completes the due diligence on the property they are interested in acquiring.  Once due diligence is complete and money is deposited into escrow, an escrow agent completes the transaction, and the investor becomes the new owner of the property.

The purchaser’s insight and talent is usually discovered during the remodeling of the building, because remodeling can be the most difficult task that requires endless hours of consultations, labor and expertise.  Many investors find the remodeling of the building to be the most laborious, but also the most rewarding.  Investors have to consult with numerous vendors, including architects, financers, plumbers and construction workers, when it comes to a remodel. In addition, investors either need to be or should consult with an expert in the remodeling phase. If a mistake is made in the beginning phases, and needs to be fixed when the remodel is complete, the repair might render the investment unprofitable.  Thus, experts need to be following the remodel on a step-by-step basis to make sure that all necessary and required protocols are taken and adhered to.  A new investor usually consults with an expert remodeler when completing his first few projects, but typically understands the process and is able to remodel future buildings without an expert by his side.  The remodeling phase can take anywhere between 3 months to well over a year.  However, if done diligently and professionally, the right remodel to an old building can bring new life not only to the building, but also to the surrounding area.  Once the remodeling is complete, an investor moves forward to the next step, which is marketing the building and finding tenants for the newly remodeled space.

Finally, after acquiring and remodeling, the success of an investment truly lies on how much of the space the landlord can lease out to tenants for maximum profits.  In order to make the investment profitable and successful, the investor has to find a talented and professional broker who can properly market the property.  Accurate and aggressive marketing is essential to the success of finding respectable tenants.  A good broker has knowledge of the area where the building is located and is also acquainted with the surrounding real estate market.  Moreover, the investor must also calculate the price per square footage for which the property will lease.  Like all other goods in the market, an attractive price often brings forward numerous tenants interested in the space.  An intelligent investor is always looking at market trends and the necessities of the surrounding neighborhood.  As long as a landlord offers what is needed in the area at a reasonable price, then there is no reason they should be unsuccessful.  The investor should truly motivate his broker in order to lease as much space out as possible, at the highest price possible to maximize potential profits.

In time of economic crisis and upheaval, not many people are able to make a huge profit by taking advantage of the economic situation.  However, certain knowledgeable and experienced investors are able to turn the negative impacts of an economic crisis into a positive large monetary return by purchasing, remodeling and leasing out commercial real estate.  By purchasing the right building, making the right remodeling decisions, all while spending minimally, and leasing out to strong prospective tenants, an investor who decides to take a smart risk in real estate, can reap large rewards.