3 Ways To Increase Your Commercial Real Estate Profits

Many people are afraid to enter the real estate industry, particularly after the housing market crash in 2008. However, by favoring commercial real estate properties, you increase your chances of making a profit. Here are three ways to create a successful strategy for your new business.

1. Buy Fixer-Uppers

When you buy a property in top condition, you save money on construction crews, building materials, and interior renovations. All you have to do is install any necessary amenities and start looking for tenants. However, don’t forget about the value of low-cost properties in need of repair. Paul Daneshrad, a leader in the commercial real estate sector, suggests looking for assets that give you asymmetrical returns. If you spend less on repairs than you would on a finished property, buying a fixer-upper allows you to make a profit sooner.

2. Maximize Your Tenants

Every time you make an investment in the commercial real estate industry, you’re taking a risk. Perhaps no one wants to rent offices in your area, or maybe a competitor starts leasing mall spaces at lower rates the same week as you. The best way to minimize these challenges is to maximize the number of tenants that your space holds. For example, when one company rents your entire building, you’re dependant on that company to stay there. Should the owner decide to move, your building becomes completely empty. On the other hand, when six companies share your building and one leaves, only 16 percent of your building is unoccupied. Your rent income still decreases, but the change isn’t so drastic that you have to take out a loan to cover day-to-day expenses. 

3. Prioritize Your Team

Working with a team allows you to give a small number of tasks all your energy, rather than trying to do everything yourself. As soon as you have room in your budget, begin hiring employees to handle renovations, project management, and accounting. Picking the right team members is essential, especially while your business is small, so take your time during the interview process. Daneshrad recommends choosing candidates who are empathetic, good at communicating, and willing to try new ideas.

To succeed in the commercial real estate industry, you must constantly think ahead and find ways to save money on new properties. Don’t forget about the importance of good interpersonal skills, either. By combining intense planning with extensive networking, you set yourself up for long-term expansion.

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