Office buildings, apartment buildings, multi-family units (duplex, triplex, four-plex), hotels, motels, resorts, restaurants, retail, self-storage, industrial and businesses for sale.
Investing in MN or WI commercial real estate is not an economic activity for those who are squeamish or risk adverse in matters of finance. That being said, when done well, investing in commercial real estate can yield some extraordinarily profitable results. When considering a venture into the world of commercial real estate investment, it is critical that you do your homework first. Know the local market, plan for contingencies and make sure that you have done a thorough analysis before moving forward with any commercial real estate investment project. Those with a strong entrepreneurial spirit, a little common sense and a tremendous work ethic have the opportunity to be extremely successful in this business.
Before venturing into a Wisconsin or Minnesota commercial real estate investment, read up. There are countless volumes of articles and books on the subject of real estate investing, which will provide you with a solid basic knowledge base. Be cautious, however. There are quite a few programs available for large amounts of money which are marketed as the 'one and only true' secret to success in the field of commercial real estate investment. Many of the best publications on the topic should be easily (and freely) accessible at your local library or distributors such as Amazon.com.
Once a prospective investor feels that they have a good background of knowledge, it is necessary to identify potential properties in your targeted market. Identifying what sort of property you want to pursue is a critical part of planning your strategy and there are numerous types of commercial real estate investments including:
Once your goal is identified, it is then important to undertake an extensive analysis of the viability of a particular project in your target market. Is the area already saturated with retail establishments? Would another hotel or restaurant be useful in an expanding community? Are there properties already in existence which could be rehabilitated and/or re-furbished to suit the needs of the community? Or, would scrapping an existing building and starting fresh be a better course of action? These are important considerations as you embark on any commercial real estate venture.
If you find what you believe to be the perfect property to suit your needs, take a closer look at the specifics. What is the size of the lot you will be purchasing? Consider whether the buildings you intend to re-purpose are in an acceptable condition or whether they will need rehabilitation. Are there zoning restrictions that will need to be changed and if so, how difficult and expensive is the process to change a zoning restriction with the governmental entity presiding over the area? Analyze the building and environmental restrictions to determine how expensive development might be in a particular area. Take a look at the requested price and determine whether it is comparable to other similar properties in the surrounding area. If you are looking at operating a business such as a restaurant, a resort or even an apartment complex for tenants, it is important to consider whether the property is located in a neighborhood where prospective clients will feel safe and be able to access groceries, libraries, banks, churches and schools in the area. A good realtor will help guide you through the process of determining the fair market value of a particular piece of property given all these considerations. While many markets are starting to recover from the economic downturn of the past couple of years, some areas continue to struggle. It is important to analyze the specific economic conditions of the area where you are looking to invest in commercial real estate.
After taking a look at the market and developing your idea, you must then take a look at the specific details of revenues, costs and ultimately profits. There are websites and software which are specifically designed to assist you in this process, performing tasks such as: projecting profit margins, mapping out projected expenses and identifying desirable tax benefits of different strategies. Without the benefit of such solid financial analysis, it is easy to get in over your head in the commercial real estate market. Due diligence into financial issues is crucial when deciding if and when to enter into commercial real estate investment. Also, be sure to engage in a discussion with yourself and your business partners about what the ultimate goal is. Are you interested in improving the property and selling it for a profit after a short period of time, building up equity over time or reaping tax benefits? Consider whether you yourself plan to be involved in the day-to-day aspects of the business once the investment is made. Identifying your specific goals will help determine the viability of your proposed business endeavor in a particular market.
Upon acceptance of an offer, the buyer will be responsible for securing financing for the project. It is important to sit down with your financial advisors and prospective lenders prior to making an offer on a property in order to avoid a financial loss and looking a little foolish if you fail to qualify for financing as expected. Financing can be obtained from private or commercial lenders. Borrowing funds will allow the buyer to tap into additional cash flows should they prove to be necessary due to higher than expected operating costs. Depending on the type of commercial establishment you intend to operate, there may be government incentives or tax benefits, provided you meet certain requirements. Again, your financial and/or legal advisor will play a crucial role in identifying such possible benefits and making sure you are getting the best possible deal from a particular lender whether they be commercial or private.
While we are all aware of the recession that has been plaguing our economy over the past few years, it may actually be an ideal time to enter commercial real estate investment. Property values are reduced to reasonable levels, making it affordable for many investors to enter the market. Interest rates are at historic lows, making it the perfect time to borrow funds from commercial or banking lenders. Plus, there are signs the markets are starting to rebound. Investors are starting to re-engage in the markets with the plethora of available bargains out there right now. Now may just be the perfect time to start on this new endeavor with historic opportunities for financial gain.