Both novice and expert investors in New York are attracted to commercial real estate investments, or CREs. Reasons for this interest include the potential for passive income, portfolio growth and consistent returns. But investors new to CREs should understand that not all commercial real estate opportunities are equal. The ultimate success or failure of the investor will hinge on their ability to identify the right opportunities.
Real estate law professionals acknowledge five main property types in the commercial real estate market. Each property type will perform differently in a particular area due to availability, demand and other factors. These five CRE property types include:
- Special purpose
Commercial real estate is not unlike other business endeavors in that the conditions surrounding investments are not permanent. Business environments are in a constant state of change that is influenced by factors like the GDP, employment rate and overall health of the economy. Understanding when these market factors are at play will help investors identify good CRE investment opportunities.
The period set aside for due diligence allows the investor to research the investment opportunity that has caught their eye. Common due diligence tasks include a review of financial documents associated with the property, property inspections and feasibility studies. Investors should take full advantage of the due diligence periods afforded to them.
Prepare for setbacks
The excitement of real estate investing causes investors to sometimes establish timelines that are not realistic. It may take a considerable amount of time to renovate, build, lease or achieve market value for a real estate rental. Additionally, delays are possible during each stage of the process.
Commercial real estate is an exciting opportunity for investors that continues to grow in popularity. These types of investments can also include complex legal issues that are difficult for investors to navigate. An attorney experienced with real estate law may be able to help smooth the process for CRE investors.