4 Commercial Real Estate Investment Mistakes to Avoid
Commercial Real Estate Investments Mistakes To Look Out For
Commercial real estate investment can be lucrative with the proper planning, but there are many steps involved in a successful deal, and every bit of effort counts.
As you plan your next commercial real estate investment in South Florida, you will want to avoid the following mistakes and also meet with an experienced commercial real estate lawyer in Fort Lauderdale to evaluate your specific situation.
Not Considering the Competition
The best commercial real estate neighborhoods have excellent investment opportunities but come with multiple competitors.
While evaluating any potential commercial property, you will also want to survey competing properties that might affect your revenue now or in the future.
You will want a deeper level of market analysis that incorporates the competition when projecting current and future revenue, rental rates and growth.
Skipping Due Diligence Steps
Thorough commercial real estate due diligence might seem burdensome, but it’s absolutely necessary in order to secure a profitable deal.
Inadequate due diligence is the cause of many potential future problems including zoning and survey issues, unanticipated structural problems, tenant issues, maintenance related expenses, and more.
Commercial real estate due diligence is not a DIY job, especially for those with limited experience. For accurate advice, make sure to have an experienced broker and Fort Lauderdale commercial real estate attorney available to guide you and help you avoid missing out on crucial steps.
Ignoring Tax Ramifications
Every investment has tax implications, and they can have a dramatic impact on your anticipated profitability.
As much as it hurts to think about, it’s important to incorporate taxes into your projections and look for the best ways to minimize them.
This is where the advice of your accountant is essential. Neglecting tax implications can result in significantly reduced returns over the lifetime of your investment.
Neglecting Exit Strategies
Every good investment plan has multiple exit strategies for the best and worse case scenarios. Markets change and life events happen that may require you to exit at an unexpected time.
It’s also good to have multiple exit strategies to maximize your profit in the shortest possible time with the least expenses.
The advice of a real estate attorney is invaluable here. Your commercial real estate attorney can meet with you to come up with multiple plans for when things go wrong or right and also explain the pros and cons of each option which may include flipping the property, an outright sale, a 1031 tax deferred exchange, cash out refinancing and more.
Call Schecter Law today at (954) 779-7009 with any questions about how to prepare for your next commercial real estate investment.