Acquiring Commercial Real Estate With Real Data

Acquiring Commercial Real Estate With Real Data

Whether you have an existing portfolio in commercial real estate, or you are looking to enter the market, it pays to make acquisition decisions based on real data. Moreover, it is essential as part of due diligence to have facts to back up your decisions. There are four stages in the neighborhood growth cycle: Growth, Stability, Decline, and Renewal. The best stage to enter the market would be in the Renewal stage. How can you identify if the neighborhood is in a stage of renewal? In this article we review several pertinent points that you should look out for when vetting a potential commercial property.

Assessing Neighborhood Wealth

Understanding the location around a particular property of interest is the best way to predict how well it will do in future. Specifically, keen investors would look out for signs of gentrification – whether the area seems to be increasing in wealth. This can be observed by noting the types of stores in the area, whether big brands are entering the neighborhood, and how people are dressed. More quantitatively, the easiest numbers to study would be property values over time. If they are increasing, it’s a good indication of gentrification already beginning. Try to get into this market as quickly as possible, though – you wouldn’t want to miss the swell of the property bubble!

Studying Crime Rates

Cities with high or increasing crime rates usually indicate an area going into decline. Examining a city’s crime statistics would give you a clear signal as to whether this neighborhood is worth pursuing. Crime statistics can usually be found with a quick online search, and you can even compare statistics across different cities of similar sizes for a better overview. Making sure you choose a city with low crime rates is also helpful in other areas, namely, to ensure that your own property will be better taken care of and likely sustain less damages from tenants.

Plans for Future Development

It is especially important to look out for future development plans when deciding whether or not to invest in a particular area. Has there been any announcement by government or private corporations of intentions to develop the district you’re eyeing? Examples of worthy developments to take note of: Schools, Transportation Hubs, Office Complexes. Check with the city or county’s office of planning and development to find out more information. If you can snap up the building adjacent to an upcoming hot development, you can bet the valuation of your property will shoot up by the time that development is completed.

Lacking Confidence? Consult a Professional

Before taking the plunge and putting in all your money, it pays to consult with a professional. LP Capital Group are a group of commercial real estate specialists who help with consultation for new projects in developing areas, and we can share with you our expertise in growing markets. Furthermore, we can help arrange funding options for you to finance your mortgages and provide the optimal funding solutions to suit your needs. Get in touch with us to get to know our existing data and research in an area you’re considering, and find out what we can do for you.