To Invest or Not to Invest: Evaluating the Financial Feasibility of a Commercial Real Estate
Investing in commercial real estate takes careful analysis on the part of the investor. However, some commercial real estate investors can over-analyze a property, and end up suffering from “analysis paralysis.” Our team has put together a simple and rational method for evaluating the financial feasibility of commercial real estate investments of any type.
Zoom in & Zoom out
Assessing the financial feasibility of commercial real estate still depends on location. Whether the property is going to be designated for private residents or leased by businesses, it helps to get a lay of the land. When assessing commercial real estate, figure out the convenience of parking. Also take into account the accessibility of local stores, markets, entertainment venues, medical care, and schools. From there, look at the larger picture. What are commutes like to the nearest major city or job locations? Is the property right near a freeway or train tracks? What is the ease of access for public transportation? Figuring out the aforementioned points will give you an idea of not only pricing, but also the benefits to talk up to prospective buyers or renters.
What Makes the Location Unique?
To accurately evaluate commercial properties, it helps to dive into demographics and research the property itself. If a commercial property has some historic value, that is definitely a plus. Even little things like the positioning of the building, the view, and if the sun shines directly into the master bedroom can affect how easy it will be to generate revenue. Beyond that, it helps to look at demographics for the area, such as the average age, employment, and crime rates.
Zoning and Public Records
Zoning and public records play a big part in evaluating commercial real estate. Both will give you an idea of what renovations you can make to the structure. This will also allow you to be upfront with potential buyers if they want to expand or make any additions to the property.
Once a full analysis has been made of the financial feasibility, compare it to your budget. Most commercial real estate investors use specific loan products to complete a transaction or renovation efficiently and affordably. There are specific financing programs for fix and flip projects, rehab, large scale construction, and everything in between. CounselPro Lending is a national leader in financing commercial real estate transactions of all shapes and sizes. If you have a property lines up in your sights, contact our team. We will work with you directly to help assess your next deal, and provide a financing program tailored to your requirements.