Your Investment Goals
Knowing your investment goals is crucial in purchasing commercial real estate.
Real estate investments generally tend to perform well over time as there is consistent demand and limited supply. Other options, including fix-and-flips and development opportunities, may provide a quicker return.
Typically, the best investment path is not only the one that suits your skill set and financial needs, but also the one that you are most passionate about. Consulting a local commercial real estate expert will help you determine the properties that align with your lifestyle and objectives.
When to Choose a Class A Building
Three classes (A, B, and C) help categorize commercial properties. Class C buildings typically require substantial work or renovations, are in less appealing areas, and receive lower rents. Class A properties provide the best locations, ideal amenities, and the highest rents, and Class B falls in the middle.
So, when does it make sense to purchase a Class A building?
Risk Level
Class A properties are the least risky investments in commercial real estate. If you are a buyer looking for a ready-to-rent property that needs little to no work, look no further. Class A properties are also easier to sell no matter the market conditions and draw top-tier tenants.
Location
Sometimes, investors target up-and-coming areas as they can yield major returns on investment. However, if the area doesn’t turn out to be the next hot spot, owners can find themselves in a difficult position. Class A buildings, on the other hand, command high rents right away as they are in areas that are already considered the most desirable.
Timeline
Your timeline may be a deciding factor. Do you have the margin, resources, and contacts for renovations? If not, a Class A property may be the perfect fit, as it shouldn’t require remodeling.
Budget
You must have the proper budget to choose a Class A building. Class A properties are likely to be listed and sell for top dollar. A Class B or C building may be a better fit if you’d rather pay less upfront and invest in updates over time.
Where to Start
If you have questions about how to get started in commercial real estate investing, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.
We give out $250 gift cards for referrals that become our real estate clients.
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