4 Crucial questions to ask if you want to invest in commercial real estate

Commercial real estate properties are known for their capacity to provide high net yields, as well as their healthy capital growth potential. This makes investing in them one of the best ways for individuals to grow their net worth. 

Remember, though, that CRE is more of a business compared to your traditional real estate. That’s why the necessary funding for this endeavor is much higher. And, just like any other business, there are certain risks to be taken. 

Keeping this in mind, you need to look at your capacity for engaging in CRE, especially in cities in Chelan County like Wenatchee, Lake Chelan, Leavenworth, and Cashmere. You can start by asking yourself the questions below:

What type of property should I invest in?

Commercial real estate properties can come in the form of office spaces, multifamily residences, warehouses, hotels, industrial facilities, mixed-use buildings, and retail spaces, among others. Each has different market values, the potential for income, maintenance costs, and risks that should be carefully weighed and studied before making the actual investment.

Where is the property located?

An investment property’s location plays a key part in determining the kind of CRE that will have the largest earning potential.

For instance, a city that is attractive for upscale mixed-use spaces may not be a good fit for properties like warehouses and other industrial facilities, in the same way that an industrial park is not a good place for constructing a residential building.

In Chelan County, the crystal-clear waters of Lake Chelan and the sunny weather attract many tourists all year round. That’s why some of the most lucrative CRE investments here are Airbnbs. A 3-bedroom Airbnb can fetch more than $4,000 in rent income compared to a traditional 3-bedroom rental which stands at more than $1,400.

What is the market climate?

While it is somewhat true that commercial real estate is more stable compared to other traditional investment options, this type of real estate investment can still be affected by major market upheavals. That’s why it’s best to have a clear understanding and up-to-date information of market developments so you can plan your investment strategies around these.

A case in point is the COVID-19 pandemic. This worldwide health threat led to a drop in demand for traditional retail and office spaces, However, it also resulted in more people opting to rent homes or apartments after prices of homes for sale skyrocketed in the light of dwindling housing stock. 

How financially prepared am I to own a commercial real estate property?

There are upfront costs to pay when investing in commercial real estate. However, this is not the only expense that you should be ready for. A wise investor needs to see things both in the short term and the long term. For your CRE to maintain a steady stream of income and profits, you need to take care of it. Prepare for maintenance, repair, and operating costs, as well as taxes and other important financial obligations.

If you are searching for viable commercial real estate properties in Chelan County to invest in, don’t hesitate to contact Coldwell Banker Cascade Real Estate. Call them today at 509.888.8887 or send an email to info(at)cbcascade(dotted)com to schedule a real estate consultation.