Associate Attorney
Investing in commercial real estate can potentially be very profitable. But commercial real estate transactions are a risky endeavor, especially if you aren’t properly prepared.
If you wish to maximize the profits from your commercial real estate transactions, you should consult with an experienced commercial real estate attorney throughout the process and consider the following tips.
Understand State and Federal Regulations
One of the biggest challenges in turning a profit from commercial real estate transactions is government regulations. When you purchase real estate, you need to understand how it is zoned and potentially challenge zoning regulations. You also need to pay appropriate property taxes.
An experienced real estate lawyer will help you minimize any tax expenditures and deal with local bureaucracy. If you try to handle these situations on your own, you could end up with your money tied up in real estate for years, reducing any profits you get from it.
Consider Multiple Financing Options
Few people can afford to purchase commercial real estate without assistance. When planning for financing your investment, you should consider all of the following:
- Taking out commercial loans
- Forming a partnership or LLC
- Getting private financers
- Obtaining a traditional mortgage
Furthermore, just because you choose one option for a particular purchase, that doesn’t mean you have to choose the same option for later purchases. Each of these options offers different benefits and drawbacks. Some will be better when you intend to quickly resell, and others will be best when you plan to hold the property for years or more.
Plan for Potential Risks
What happens if you purchase real estate, and then it is destroyed a few days later in a tornado? If you are properly insured, you will get compensated by an insurance company and lose little to none of your investment. However, if you aren’t prepared, you could be financially devastated.
Risk management is a key to maximizing profits from commercial real estate transactions. If you only purchase and resell one building, you are unlikely to face serious problems. However, if you regularly sell real estate, eventually, the odds will catch up with you.
Several different types of risks are present when investing in real estate. Your property could be damaged, the market could suddenly crash on a specific type of real estate, or you could face a lawsuit for any number of reasons.
Planning for these potential risks will protect you. Typically, you should consult with an experienced real estate lawyer to determine how to best plan for these events.
Diversify
While this is a form of risk management, it also provides opportunities not tied to risk. When you diversify your assets and types of transactions, you give yourself more chances to take advantage of opportunities when they arise.
For example, if you have multiple holdings around a major city, you might be able to take advantage if a professional sports team builds a stadium near some of your property. There is no better time to sell a property than when demand suddenly spikes, and having a diverse portfolio lets you do this more often.
Contact Patrick, Harper & Dixon in Hickory, NC, for Real Estate Transactions
Are you looking to sell commercial real estate? Our law firm will help you take steps that should lead to greater profits from your real estate investments. Contact our law firm today to schedule a consultation with an experienced commercial real estate attorney.
