Commercial Real Estate: Five Common Mistakes New Investors Make

Commercial Real Estate: How To Choose The Right City
July 9, 2016
Commercial Real Estate: What You NEED To Know BEFORE You Invest
July 9, 2016

Commercial Real Estate: Five Common Mistakes New Investors Make

You
have to make sure when you are just getting started in the commercial real estate field that you set yourself up properly. You
are going to make mistakes in this business, but you have to learn how to think
on your feet and bounce back.
Commercial real estate can be a tough area to begin a
career in. Anything could go wrong at a moment’s notice. The carpenter that you
originally made a deal with may decide that the quote he sent you was not
enough to cover the work agreed upon. You could have been misled to believe the
family home that looks ready for a quick turnaround now needs thousands of
dollars in repairs and refurbishments. Quick thinking and due diligence will
become your best friend, however, you will still run into some headaches.
One of
the biggest mistakes that novice investors run into is misjudging the market.
Three words could make or break your business: supply and demand. The most
successful entrepreneurs are people that see a need in the market. Once they
figure that out, they figure out multiple ways to fulfill that need for their
customers.
For
example, if you find that your city is having an increase of entrepreneurs or
small business owners you could invest in co-working spaces. Looking for the
census records of the city you are in can yield a lot of answers. Things like
average household income, the amount of people that are moving to the city or
the rate of employment are great indicators of the market conditions.
Most
experts will tell you the best way to succeed is to follow the numbers
religiously. You always want to make sure that you are able to accurately
figure out how much profit you will make off your investment. You do not want
to spend a lot of your career just breaking even. Make sure you calculate every
expense that you may incur over the entire process. At the end of your deal you
do not want to find out that you have another expense that puts you the hole.
That being said you do not want to forego certain repairs or enhancements to
save money here and there.

Everything in the commercial real estate business ties in
together

 
You
have to remember that many mistakes usually have a ripple effect. The
contractor you forget to schedule today cannot make the repairs before the
inspector checks to see if the house is up to code. Another thing people new to
the business may do is overextend their loan. What we mean by that is borrowing
too much money from lenders when investing in a piece of property. If the value
of the property does not exceed or at least match the price you are asking for
you could end up owing a lot of people a lot of money.

When things get a little hectic
during commercial real estate
business sometimes you have to fold

 
When in
doubt know your way out. There is a thing called scope creep. This is when the
general scope of the deal or flip that you want to do gets more complicated, or
has much more work than anticipated. Many beginners feel as though they can
force a deal to go their way, however, it may be more beneficial cutting your
losses and finding a better investment.

 

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 

Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Texas | 78701    

 
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About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

 

 

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