How You Can Protect Your Commercial Real Estate Investments
Commercial real estate can be a lucrative investment when done correctly. To fully protect your asset, consider these commercial real estate investment tips.
Choose the Right Property
Choose a structurally sound property in a good location. Fixer uppers are fun, but they are also costly. If you plan on flipping your commercial real estate, make sure you have the skills necessary to perform the job or the means to hire reputable contractors.
Also, consider the type of property its inherent risks. For example, a manufacturing facility presents more risk than an apartment complex due to the heavy machinery and processing hazards present.
Get the Right Insurance
To protect your commercial real estate investment from damage and theft, you need excellent insurance. Fully understand the terms of your insurance plan and consider extensions beyond the standard coverage. For example, you may need additional weather protection such as wind or flood insurance. If theft is a known issue in the surrounding area, you might consider an excess theft extension.
If you store equipment, vehicles or furniture outside, make sure your insurance covers everything located on the entire plot of land, not just what is located inside the main structure. This also applies to external structures such as sheds and storage containers.
Find the Right Tenants
Whether you rent your property for residential or commercial use, only allow responsible tenants in your property. Conduct thorough background and credit checks for all applicants. Collect security deposits upon signing lease agreements, and make sure tenants are fully aware of their responsibilities and the consequences of not paying rent on time.
Keep Up With Maintenance
Properly maintain and repair the property to keep it in great condition. Make sure all plumbing, electrical and roofing is up to code and meets modern-day standards. You might also evaluate and consider replacing outdated insulation, windows and doors to make your commercial real estate investment more energy efficient.
Find the Right Lender
Research all potential financing options and find a lender you can trust. Balance interest rates, down payments, monthly premiums and other fees with your short- and long-term goals. Keep in mind, the more money you can use toward a down payment, the less you owe in the long-run.
Overall, if you choose a good property, get the right insurance, keep up with maintenance and find the right tenants, your commercial real estate investment should be protected. Consult a financial expert for insight on getting the highest return on your investment.