How Do You Know If A Commercial Property Is A Good Investment?
Investing in commercial property is a great way to increase your cash flow. In fact, according to millionacres, the mega-wealthy have made real estate a key part of their investment strategy. JMK Property Investment manages investment property in Miami Beach. We do everything from helping you find tenants for your building to overseeing repairs and maintenance.
As an investor, how do you really know if a commercial property is a good investment for you? Read on to learn some things to look out for when investing in commercial property.
Location, location, location! This is a top priority when investing in commercial properties. First, consider what type of tenants you will have. If you are considering investing in a shopping center, the building should be in a desirable area. This means it’s a place where people will want to shop. It is also critical to pick a building that is near other shopping centers. This will help it be seen as a shopping destination. Investing in a building in a remote or unsafe area will bring in fewer customers. This leads to your tenants struggling.
In addition, picking a prime shopping location will bring in more established, successful retailers who will draw more customers. South Beach, the Design District, and Coral Gables are three shopping destinations in Miami. While it may initially cost more to acquire a building in these areas, your return on investment will be much higher over time.
Similarly, if you plan on investing in a building where there will be medical offices, look for properties in medical centers or near hospitals. People like having their doctors all in one place; this means if you invest in a doctor’s office building in a shopping district, patients won’t want to come. Investing in medical offices near Cleveland Clinic Weston or University of Miami Hospital will attract prestigious practices as tenants for your building.
Another popular type of investment property is an apartment building. The location you want to invest in will depend on what type of apartment complex you want to have. For example, if you want to own a high-end apartment building with a variety of amenities, you need to make sure the apartment building is in a safe and luxurious area in order to attract tenants who will pay high monthly rents.
At JMK Property Investment, we have years of experience working in the Miami real estate scene. We can help you find the perfect location for your investment property, whether it’s a shopping center, medical office building, apartment building, or something else!
Condition of Building
The next thing to consider is the condition of the building you will be investing in. Initial costs will be high to put money down on the building. Additional costs will be incurred to successfully market your property to acquire tenants. You also have to be prepared to have some time initially where your property might be partially vacant, because it takes time to draw tenants. With this in mind, the last thing you need is to invest in a rundown building that needs a lot of renovations and repairs before it is ready for tenants. While some repairs and maintenance are inevitable, keep them at a minimum so that you are not dishing out a huge amount of money in the beginning.
Potential Annual Return
Before investing in a property, do your research! Check out things like retail industry reports, average vacancy rates in the city of Miami, and other points of data relevant to the type of property you are buying. It is critical to get a good idea of what is feasible for your annual return. Maybe your investment won’t be profitable the first year, and that’s ok; the idea is to gain an understanding of how much profit you could make each year from your investment.
In addition, be sure to budget for expenses like property taxes, property insurance, and have an estimate for annual maintenance expenses. Vacancy rates are also an essential number to consider. It is unrealistic to think that your building will be fully occupied 100% of the time. Understand what a typical vacancy rate in Miami is and use that to help you determine whether your investment will be profitable. At JMK Property Investment, we can put together reports and budgets to make the potential annual return analysis process easier.
Last but not least, identify who your tenants will be and understand how that will affect your profits. For example, if you are investing now during the COVID-19 pandemic, understand that a shopping center won’t have a great return on investment in the near future. On the flip side, people always need a place to live. An apartment building is an investment that won’t be as affected by the pandemic. The same goes for medical offices. People always need medical care, so this investment is much more stable than retail.
JMK Property Investment Is Here To Help You Find Your Investment Property
At JMK Property Investment, we are here to help guide investors to find the perfect investment property in Miami and then help to manage the property. As an investor, commercial real estate is one of the best ways to get a positive return on investment. Before you pick any old property in Miami Beach, be sure to consider the location, the condition of the building, the potential annual return, and the type of tenants who will be leasing out space in your building.
For more information about how to find the perfect investment property and property management services, contact JMK Property Investment today.