Commercial real estate market has become more popular since it offers profitable deals. However, investing in commercial real estate is not for everyone. Some investors are not confident enough to take a step into this investing type. However, there is market that supposed to be convincing enough for investors to consider investing in commercial real estate. Many investors are not confident to invest in commercial real estate due to the pressure and the risks. Some even say that this field is only for seasoned investors. Finance is one of the most feared obstacles by new investors to start investing in commercial real estate.
One of the best ways is to find out the right market to start. Here are criteria of profitable commercial real estate market for investors:
Profitable market for commercial real estate investing is supposed to have high tenant demand. There are up-and-coming markets you can look for. They create new jobs and develop new residential complexes. This is due to increased demand for space by the tenants. If you cannot find this type of market then it will be hard for you to get started with the investment since your goal will be more difficult to achieve.
High Asking Rent
Ideal and profitable market for commercial real estate investing is the one with high asking rent. To find out about this, you might as well do due diligence. It is essential to research the market so you can find comparison of average asking rent price. The higher the asking rent price is, the more profit you can potentially gain especially when your purchase is considerably low.
Low Vacancy Rate
Low vacancy rate is supposed to be included in the criteria of profitable commercial real estate market. It will become more profitable if the market has high tenant demand. You will earn substantial profit since you can charge higher the rent price.
Finding commercial real estate market with low purchase prices is seems to be too good to be true for new investors. However, this is a really good chance to make profit. Finding property priced at or below market value is like a blessing. You can opt for distressed properties since they are usually priced below the market value.
Low Unemployment Rates
The next promising market is the one with low unemployment rates. This is so logical though. If the market is full with unemployment rates that it indicates that there are more citizens who are incapable in paying rent which does nothing good for your investment. Meanwhile, market with low unemployment rates indicates that there are more spaces needed for office buildings in the area.
There are many strategies in which even new investors can successfully achieve their goal in commercial real estate investing. Those strategies don’t always have to be conventional though. It is perfectly fine to choose the unconventional ones. It is true that investing in commercial real estate is challenging for new investors. However, you can use it as the future goal especially when you are looking for high-profit potential.