PHILADELPHIA, PA, August 21, 2013 /24-7PressRelease/
-- Joy Levine
knows that real estate investments are hot right now, and that many people are hoping to capitalize on a housing market that is regaining its strength. However, Levine urges all potential investors to understand that commercial real estate investment is much different than residential real estate. For this reason, a proper amount of knowledge and understanding is required in order to enjoy success in this sector. Levine applauds a new article that highlights some of these key differences, providing valuable information to would-be investors.
An important point to bear in mind when venturing into the world of commercial real estate is that these types of properties have a different value than residential properties. Homes are valued based on recent comparable sales of similar properties in that area. However, commercial spaces are valued based on cash flow. For example, two buildings that have 6,000 square feet each in the same block may have drastically different asking prices. This is because a small grocery store will have a much different cash flow than a prominent law firm.
Secondly, a person must have a strong understanding of the market or a particular commercial sector. An individual with experience in one particular commercial sector will probably fare best if they stay within that field. Even a person who is only the landlord should not consider investing in a hotel or medical practice if they have no prior knowledge of these fields. Though there are some basic principles that apply to all sectors, this lack of knowledge may turn an investment into a risky one.
Patience is especially important when investing in commercial real estate. An individual should not just invest in a property that is on the market simply because they have the funds. Instead, it is advisable to take some time to analyze the investment, verifying that it truly makes sense before proceeding. It is also wise to get opinions and insight from other professionals with knowledge of the situation. A wise investor will avoid rushing into any decision before they have verified that it makes sense for them at that moment.
A person must also take a moment to consider the long-term impact of their investments. This includes considering cash flow, as well as thinking about what is likely to happen in that area in the coming years. If it is clear that the neighborhood is on the decline, it may be hard to attract tenants or future owners for that property. In order to get a sense of what the neighborhood may turn into in the future, take a look at the major employers in the area and their financial health. This is often a good indicator of what is to come.
"Like any business decision, investing requires a lot of thought and knowledge. Diving into it headfirst with no working knowledge of that sector is dangerous, especially for commercial investing. A person should carefully take the temperature of that area, thus helping to prevent them from making a choice they later grow to regret," states Joy Levine.
hails from Westchester County, and currently resides in New York City. In the past, she was a successful insurance broker. Now, Levine owns her own business. Her company provides short-term rental options for executives who must stay in the city for work. These comfortable spaces allow a resident to enjoy life and relax after a long day, without making a yearlong commitment to life in New York City. She can be contacted at 646-662-7258.