When it comes to the commercial real estate market in Canada, Richard Crenian states that now is the best time to be getting a piece of the action. But just because the market is “booming” doesn’t mean you can’t make mistakes. Like any big investment, buying commercial real estate property takes a lot of careful consideration and knowing the industry. Here are some tips from real estate expert Richard Crenian for succeeding in the market:
Expert Tips for Success in Commercial Real Estate
Focus on one investment type at a time: When you’re looking to purchase property for the first time, Richard Crenian advises on focusing on one type of property at a time. Each property is going to need your undivided attention. It’s easier to focus and excel with one property versus with several. If you are partnering with another commercial property management company, they can help you understand what needs to be done.
Get advice from an expert: Commercial real estate properties are a big investment, so you don’t want to invest just based on guesswork. A mentor like Richard Crenian or working with a property management company, like ReDev can save you from making huge mistakes and connect you with resources that you otherwise wouldn’t have immediate access to.
Learn to recognize a good deal: Commercial real estate pros know how to spot a good deal when they see one. “How?” you might ask. Well for starters, they have an exit strategy; a good deal will be able to make a profit when you eventually go to sell. Another thing is to always be looking for damage that requires repairs. Pros know how to assess risk and ensure that the property meets your financial goals.
Don’t just accumulate, be a partner : The goal of making investments is to produce a profit. So, if you purchase a property that produces no profit, you really just acquired a property instead of making an investment. This is where Richard Crenian can help. We do extensive research to find properties that we know will make a profit and can be expanded upon to increase their value, in order to make a bigger profit later down the road.
Plan and budget ahead: One thing that is commonly forgotten when purchasing commercial real estate properties is that over time, you’ll have to spend money on the upkeep of the building. This can include a number of things, such as a new roof, the electrical system may need to be updated, or the parking lot may need to be expanded. Richard Crenian says it’s important to plan ahead for all these by ensuring you have enough budget and a long-term plan for maintaining your property, in effect, growing your investment
If you’re in a partnership deal, consider a non-recourse loan: A non-recourse loan means that you aren’t personally tied to the loan. This gives you two advantages; first, it allows you to be taken off the loan if the partnership doesn’t work out. Secondly, if the property fails, you won’t be personally tied to it.
Ensure adequate protection: When you partner and buy commercial property, there is the risk that a lawsuit will come up at anytime. This means you need to make that you and your assets are protected. Some questions to determine whether you’re protected are:
- How is your property protected?
- Are your other investments totally separate from each other so that one lawsuit doesn’t affect the other investments?
- What do you have at stake if you lose a lawsuit?
- Is your personal property protected? (i.e. your home).