How To Effectively Grow Your Commercial Portfolio
Category Property Management
Whether you are planning to start a commercial portfolio or simply grow one to more successful heights, it is important to conduct efficient research on potential earnings as well as create an in-depth strategy. The main aims for most investors include capital growth and a positive income stream from letting out the property. Here are a few ways for investors to effectively grow their commercial portfolio:
The first investment
The initial step into the world of commercial property investment can be daunting. Taking your investment from one to a number of properties takes time, money and effort. If you had to speak to other experienced investors they will highlight their first property investment as being the most difficult. The trick is to start small, start local, and work with an experienced agent. If you get it right at this foundation level then you are a step closer to building a hugely profitable portfolio.
Location, Location, Location!
The location of the property is an important feature for investors to consider. You will find it difficult to secure tenants if the location of the property is not in demand. This will lead to you running a loss from your investment. Examine the location that the potential commercial property is situated in and do prior research on the area. For instance, will their be bigger developments coming up in the area? Will certain developments add value to your property or decrease it? Once you get into the knack of doing your property investment research you will be able to spot the property gems and up-and-coming areas with ease.
Making a profitable investment
Investors need to understand that residential properties are valued differently from commercial real estate. The income from commercial properties are related to usable square footage. In other words, it is wiser for investors to earn more income on multi-family dwellings. Commercial property leases are generally more longer than residential leases and will pave the way for greater cash flow. By investing in properties that have a positive cash flow (rental income minus property expenses) it will allow you the leverage and equity you need to invest in other properties.
See the bigger picture
Avoid investing in a property based on your emotions, ie. how you feel about the investment. Indeed it is exciting to get a great deal on a commercial property but analysing what the property could be is an even greater reward. Shop with your imagination, see the property for what it could be. This skill will help you buy all sorts of properties and diversify your commercial portfolio.
When to buy and sell
Most investors wait until the property market is in their favour to make a purchase. Recessions generally translates into a "buyer's market" making it a great investment period to grow your commercial portfolio. A buyer's market exists when supply exceeds demand, giving investors an advantage over sellers in price negotiations. In contrast, the "seller's market" sees demand exceeding supply and owners have an advantage over buyers in price negotiations. This will be the perfect time to sell your property. It is advisable to avoid cross collateralization; where you take out a loan and secure it against more than one property. This can be a dangerous move as your bank can force you to sell multiple properties to pay the loan.
If you have decided to invest in commercial property contact the Kamdar Group now. Our skilled and experienced team of specialised portfolio managers are ready to help you secure the best investment property to effectively grow your portfolio. We take the necessary measures to ensure that your investments are made throughout a hassle-free experience.
Author: Kamdar Group
