While location may get all the hype with commercial property investments, what many people fail to realize is that smart investing begins at the time of purchase. This is why timing is so important. You’ll need to gauge your financial readiness, long-term vision, and the real estate market at-large. There are plenty of other factors worth examining, but let’s explore these key components more in-depth and discover the best time to invest in real estate.
Buyers vs. Sellers Market in Commercial Real Estate
Understanding the ebbs and flows of power within the market is foundational to the investment process. A major determiner is what’s known as either a ‘buyer’ or ‘sellers’ market. What does that mean? In a nutshell; it’s understanding who has the advantage during the time of transaction.
Here’s a quick guide to understanding the major differences between a buyer’s vs. seller’s market:
What gives buyers the advantage?
- Increased selection of available properties
- Fewer buyers to compete with
- Property sales take longer, preventing rushed decisions
- Real estate prices are lower; increasing price reduction
- Easier to make cost-saving contract negotiations
What gives sellers the advantage?
- Fewer properties on the market for buyers to choose from
- The selling process moves fast
- More bids for the same property
- Prices increase with increasing competition
- The seller is more likely to control the contract details
Every potential real estate investor must stay current with the ever-changing trends of the market. Time and money are always at stake when buyers miss out on the best timing to make an offer.
Investing in Commercial Real Estate with Long-Term Vision
Taking the leap into commercial real estate responsibilities at any point in time requires thoughtful consideration of long-term vision and intention. What is your primary purpose for investing? What do you expect to gain from this investment in the long-term and immediately?
By asking yourself insightful questions and discussing your vision with professional guidance, you are better able to gauge the best timing to buy.
Rushed decisions based on shallow research is often costly and sets you back on your initial goal for making the purchase. What is worse is discovering structural or internal damage. Many structural issues may not be so easy to detect when hastily going through the transaction process.
Gauging Personal Financial Readiness for Commercial Read Estate investments
Determining your personal financial readiness equally determines the best time to make a property investment. Ideally, the best of both worlds is when you are financially prepared and the market is in your favor.
As a potential property investor, you will need to have your finances in shape to be eligible for consideration in the buying process. Also, you will need to be able to incur the many costs associated with real estate investment.
Here are common factors to consider when gauging financial readiness:
- Credit score
- Debt-to-income ratio
- Down payment costs
- Property taxes
- Regular payment requirements
- Property insurance
- Renovation spending cost
- Other upfront costs
These are just some of the many key financial areas to carefully consider when gearing up to make an investment. Consulting a commercial real estate professional is the best way to ensure you are in the best position to make a wise and fruitful investment.
Plaza Companies Offers Expert Guidance on Real Estate Investments
Phoenix is home to one of the most sought-after property management companies in the state. With a team of skilled industry experts, your next investment is in qualified hands. There’s no better way to avoid costly mistakes than by teaming up with competent and experienced professionals. We are well-prepared to offer advice and resources that set you up for success in the real estate investing space. Contact us today!