27 Aug Commercial Real Estate Investment: When To Consider Working With A Counselor
A prospective commercial real estate investor may feel overwhelmed when getting started with real estate investment because of the great variety of commercial properties. New real estate investors in particular may be fearful that someone will “sell” them something that is the wrong fit for them.
One answer to this challenge is to work with a professional commercial real estate broker who can act as a real estate investment counselor. The role of the counselor is to interview the prospective investor with whom they are working to learn what their goals and objectives are and what they hope to earn from an income property. Armed with this knowledge, the broker can communicate the benefits of investing in various types of properties and how best to identify them.
Some of the factors that a real estate counselor will take into consideration when advising their clients is their age, risk tolerance, and income objectives. For example:
- Some considerations should be given to the risk of loss for each age bracket of investor. Should an older investor purchase a property with the smallest down payment and highest leverage position? This will limit cash flow and may cause the property to have a “negative” cash flow. Is this what they want – or do they want cash flow from the property?
- How about the younger couple? Are their objectives for long-range estate building or for current cash flow? Would they be more willing to take chances with a marginal investment that might bring big returns later?
Ultimately, the answers to these questions must be decided by each investor for himself or herself. But a good real estate investment counselor will walk potential investors through all of these questions and help them arrive at the right answers for their situation.
When a new investor has a better idea of the type of property that will do the right job for him/her, or them, the next step is to begin looking at available properties and evaluating the various benefits and risks in light of their own situation.
What is right for you? A new rental unit? A strip center? A one-hundred unit apartment property? An Outlet Center? Perhaps you should have five or six apartments or commercial properties in scattered locations. Real estate counseling can show you that you can choose which is right for you and know the reasons why it is right!