Are there better locations to invest in commercial real estate property?

GREG ARBUTINE
Apr 20
2 min read

The following is a commercial real estate developers guide on the metrics of shopping for the ideal location of your income property:

High growth area - Ideally, when you locate an income property to invest in, you will want it to be in an area that is experiencing high growth. This can be either in an area in general that has high growth overall or it can be in a pocket area that is hot and up in coming. With ever increasing demand, this will usually increase prices in the long term. If rents and values are rising, then that is a good thing for you as a commerical property owner. You will eventually be able to charger higher rents and receive more income as a result. Plus, if your building's value is increasing, that will in turn make your equity improve as well.
Low Real Estate Taxes - You want to find a location where the municipality charges low real estate taxes. If your property is burdened with very high tax rates, then your tenants have to pay more money as a result and that money is going to the goverment and not to you as the property owner. If the taxes are very high, this also lowers your ability to seek higher rents.
Low Crime Rates - If the area is low in crime rates, you will be better off as a commerical real estate owner. Crime and robberies can create a burden to the businesses you rent to and as a result you the landlord will have a higher turnover rate of tenants.
Low Natural Disaster Prone Areas - Fires, earthquakes, floods, tornadoes, hurricanes and other malicious natural factors can be a huge burden to a commerical real estate business owner. Unless the property is going to be especially lucrative, it's best to avoid a location that is prone to natural disasters. Now-a-days, however, that is getting harder and harder to do.
Local if self managed - If you are the owner as well as the local property manager of the property, then it's a lot easier if you live close to your property. If you live from a far and try to manage it yourself with out a property manager, you are just begging for some troubles.

Conclusion: When locating a suitable property for investment purposes, follow the above suggestions to achieve the best results. Happy hunting out there for a great commercial real estate space!

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Alan Development Co-Owner

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