Investing in commercial real estate can be a very profitable venture. Most commercial spaces have the potential to bring in much more money than what goes out for the mortgage loan. In order to make any purchase worthwhile however, it is extremely important to conduct a thorough commercial property analysis beforehand. Several factors will determine whether or not your investment will be rewarded with profit and growth.

#1. Location

The old saying “location, location, location” definitely applies when it comes to buying commercial property. Where the building is located will determine how easy it will be to attract customers or how easy it will be for employees to get to work. 

#2. Price

During your commercial property analysis, you should make sure that the price offered is based on the fair market value and that it closely resembles the price offered for comparable buildings in the area. Your analysis should also include an inspection of the building to find out if there are any issues or problems that would bring down the asking price.

#3. Potential Income

Calculating the amount of money you are likely to bring in each month from renting the property is an important part of the commercial property analysis. You will have to make a monthly mortgage payment and profit; you will need to make at least that much back in rent plus some. This means attracting and keeping tenants will be essential. Check out nearby properties to discover if they have good rates of renting and retaining tenants. If buildings in the area have changed hands often in the past few years, the realty may be a financial dud.

#4. Taxes

You will spend a fortune getting into a commercial property mortgage with a twenty percent or more down payment, closing costs, and insurance fees. One thing you may forget to plan for is property tax. These can be very hefty in some places depending on the city and state tax codes and they may add thousands of dollars to your investment expenses. Be sure to check into any local tax incentives available and figure out how much you will have to pay each year. 

#5. Zoning Laws

Each city has its own set of zoning laws setting forth how certain areas of town are allowed to be used. Part of your commercial property analysis should include finding out what the zoning laws are and if you will be able to lease out your building as you please. These laws can sometimes be confusing, so be sure to learn all the details before making your purchase.

For instance should you buy residential or commercial property? What is stamp duty & how much will it cost me? What is capital gains tax & how much will it cost me? Where are the best Real Estate Listings? Which real estate agents should you talk to? There are many more questions that I’m sure you want to be answered but for now lets have a quick look at some of the basic concepts that any real estate for beginner books should cover. Once you understand these concepts you will be well on you way to completely understanding property investment.

#1.  Which one is for me, residential or commercial property ?

Property investment

Here are important points to consider about property investment:

1. The bottom line  of property investment is to find an affordable property that can prove to be highly lucrative for the future. Anyone can invest in property and use any number of the many books and guides packed with helpful information that are available on the internet and at local bookstores and libraries.
2. Sometimes this huge amount of information can seem to be complicated and confusing. The best advice is to start from a primary level and then learn some tricks of the trade. If you are a beginner, you must look for a profitable property investment.
3. Though the whole scenario of investments is always changing, property investment is still a viable means to enhance your financial portfolio.
4. In the last decade, a common way to buy and sell property was to buy a house and / or to fix the existing problems. Prepare your property for resale and then sell the house quickly.
5. Residential property investment is the investment that can carry low risk and is not like investing in commercial property where investors have to worry about the conditions of businesses. Property investment loans are not as difficult to get as other types of loans and investing in residential properties can give investors a substantial financial boost.

When many people hear the term ‘property investment’ they automatically think of what they have read in the papers: falling house prices, fluctuating interest rates and the failing economy. Remember, despite all the hype, property is still an investment vehicle. A vehicle that gives investors – we mean you – the flexibility to control your involvement and how much time you invest within them.

Take a look at stocks. Do you really understand how they work? Not many of us do, but we still invest in them because we know there is profit. But imagine what you could achieve with an investment that you could completely control? No worries. No fear. But knowing exactly where you. 

Well with property you can. Your choices will be endless.

This some reason Why Property Can Become the Perfect Investment :

• Real Estate Stocks and Mortgage instruments

Now if you wanted to be a passive investor this is the route to take. Here you can place funds into the stock market in the form of equities of major national homebuilder firms, and they will do the rest for you. Or alternatively you can follow another investment strategy: discounted notes.
The rules to this investment are simple.  Sellers quite often are quite happy to accept a mortgage from a buyer to begin with but later want to convert it to cash. To do this they need to sell the note to an investor – you – at a discount. And the rest? Well. Whilst they are free of the mortgage, you will be receiving monthly repayments from the buyer – when you have never even seen the house. 

• Appreciation of property values

This one is the more traditional routes and one we’d most recommend if you plan to sell your properties later on.
Take the current financial climate. You can now invest in properties at 70-80% of their original value without a second thought. Giving you instant free equity.
Now consider this. After investing you decide to either rent your property out or live in it yourself. Over time, your property investment will begin to appreciate in value, and if it is anything like what we have experienced before, you will have access to a property that is greater in value than the top properties of 2007.
And if you do eventually sell, you will not only experience a return on your investment you’ll have that initial extra equity to boot too.

• General Price inflation in the economy

Even if your properties are not appreciating in value – as properties are doing now – this is not the end of your property investment. No. Their value can also be affected by economic inflation.
So let’s just say for example that you are developing some properties. If the cost of labour and materials is continually rising, then the cost to build an identical property could be more than the original. And if each property you build in one area is costing a bit more each time, then in turn their value as a complete development site will have risen.
Meaning at the end your property values will be higher than they were to begin with.

• Cash flow and mortgage repayments

Compared to traditional investments that require some money on your part to maintain and pay for them, with rental properties you don’t have to deal with that. Your tenants will essentially pay your repayments for you, whilst giving you an additional positive cash flow each and every month too.
With figures like these it is easy to see why property is considered a stronger investment than stocks and the gains are much more profitable.
And here is the best part. Even if your rental income covers only the mortgage repayments. No more. No less. You will still have the joy of watching the equity in your property grow over time.

• Buying below market value

Look in the papers and you’ll read many reports of investors who are selling up in the current financial climate in order to maintain their profits. This is a big mistake on their part, but one you can take advantage of. You see they will be so keen to access the equity from it, they will be happy to sell it to you for below value. Great!
Then there are other cases when a property has gone into a foreclosure. To sell the property and get their money back,lenders will often take less than the market value so that they can avoid any further marketing expense and begin again with a clear slate.
Now here is the advice you have been waiting for… Find one of these properties and you will immediately enter into an equity position, purely based on profits.
So if you do spot one… gets investing and buys low. The long terms profits will be incredible.

• Converting the use of your property

Imagine investing in a run down 5 bed property and being able to convert it into student accommodation or 2 apartments. You could potentially increase your rental income and benefit from having multiple tenants all within one property. Meaning there will always be someone living in your rental property.
This is what is so great about property investment. You can do a similar thing to any type of property. Take for example this concept. You have just invested in some apartments that currently have low rental yields.
With a little remodelling, you can convert these said apartments into condominiums, and nearly double your rental yields.

• Create new value

Every region or neighbourhood goes through a price fluctuation at some point. So spotting a potential hot spot – before its property prices have increased – can be quite profitable.
In this one area you can build up your property portfolio and sit back and watch as your properties appreciate in value. Perfect!
Get the picture – property investment can offer you consistent ‘positive’ cash flows every single month, plus can come in all shapes and forms for you to choose from.
So if you are looking to invest in rental properties consider your options for a moment. There is more to property investment than meets the eye.