During this season of remarkable unpredictability in almost all investment markets, it is particularly difficult to gauge how and when to make investments. The commercial real estate market is no exception, as values and trends are difficult to pin down effectively.
There are some unpredictable aspects of the current market in Arizona, as could be expected. Generally, it seems like some areas of commercial real estate – like multi-family units and industrial – have experienced minimal damage, while the office and retail markets are struggling more significantly.
Good Investment Principles
These challenging trends at the forefront for more potential investors makes this a critical time to review some basic principles for sound real estate investment strategies:
- Real estate has been a great investment historically: Real estate provides passive income and land almost always appreciates over time.
- Do your research: Even though real estate is generally a good investment, this does not mean that every specific real estate investment opportunity is sound. Before investing a dime in a new real estate opportunity, you need to understand the local economy, read the land deed carefully, understand the local roadway systems and work with an experienced commercial real estate lawyer to assess the investment.
- Never underestimate the importance of location: The seemingly perfect property could yield substantial losses if it is not located well. Make sure any potential investment property is located strategically to succeed.
- Never underestimate the importance of a good team: Even if commercial real estate investment if your only primary means of income and this is almost all you do, you should not try to handle this alone. You need a team around you. But a team is only as good as its weakest link, so make sure the people you work with are trustworthy, loyal and competent.
- Work an attorney you can trust: Every real estate investment is laden with legal complexities and potential pitfalls. It is critical to work with a commercial real estate lawyer who can protect your interests through the process.
By implementing these basic investment principles, you can avoid poor investments, legal complications and other significant problems. Especially in a time of economic upheaval and uncertainty, it is more important than ever to invest with care.
