Buying commercial real estate, or CRE, in Minnesota can be profitable for investors. The idea of a CRE investment is attractive, but the finances both now and in the near future should be accounted for. Buying a property that doesn’t at least give you a 6% annual return isn’t recommended. Here are a few other mistakes to avoid in CRE.
Becoming infatuated
Making your investments in CRE personal is an emotional error in some cases. Being professional, instead, ensures that you appreciate a property solely for its utility. Falling in love with something you don’t even own yet is always a risk.
Negotiating before zoning is cleared
Commercial real estate is only granted the rights for commercial activities via zoning. Unless you’re the developer or builder, investing into properties that aren’t completed is risky. Ensure that everything is legal regarding the property; then, start a business conversation.
Lacking prior support from banks
Just as with buying a home, banks can assess your finances and pre-qualify you to make an offer. Finding CRE to purchase without yet being qualified for the money isn’t the smart way to go. Build relationships with banks and lenders before you start looking for a property.
Working without financial or legal aid
Being competitive in CRE calls for the help of professionals with experience in finance and law. Though some investors have real-world experience, there’s a hefty learning curve in CRE. The legal and financial aspects of this industry can be overcome by asking for help.
Buying or selling without a backup plan
Your backup plan in real estate has to do with money reserves. Without some money set aside for the unexpected, your business dealings are exposed to great risk. Make sure that you have the capital to buy, manage and then maintain a commercial property.
Educating yourself is necessary when succeeding in real estate. The mistakes you make are ideal opportunities to learn and try new things, so don’t fret. Keep your mistakes in mind, and you can gain experience in CRE that helps you succeed in the long run.
