Though commercial real estate investments can be profitable, there are still certain things you will want to take into consideration before choosing whether or not to invest.

 Industry Cycles

The commercial real estate industry regularly experiences ups and downs, or highs and lows. These are heavily influenced by the state of the economy at any given time. As of this writing, industrial and multifamily sectors are thriving. In comparison, industries that are currently suffering include hotel and retail sectors. The best way to prepare yourself to invest in commercial real estate is to study industry trends.

Interest Rates Are Tricky

Any real estate investor will tell you that the more debt a loan will put you into, the bigger a risk you are to the loan company. And no matter the amount of money a commercial property earns you, the mortgage still has to be paid. This can become an issue if a property needs extensive repairs or faces a vacancy. Before taking any loan, it pays to do a thorough analysis of the debt you may later incur.

Additional Categories

Commercial real estate investments generally fall into one of four categories; office, multifamily properties, retail, and industrial. But it is important to keep in mind the other categories like self-storage, student and senior housing, call, and data centers. As an investor, you may choose one of these categories over the more commonly chosen types. And while the lesser-known types may be more lucrative, they are also a bigger risk than those that fall into the four main categories. Thorough Internet research can help you determine which category you want to invest in.

 The Importance Of Location

No matter what type of commercial real estate you are investing in, the physical location of the real estate is extremely important. The strongest markets can be found in some of the country’s biggest cities, including San Francisco, New York, Chicago, and Los Angeles. But it isn’t just the market that matters. Also take into consideration the neighborhood or block a piece of commercial real estate is on.

For more information about commercial real estate, please contact Lionheart Commercial Capital.Â