Things to Avoid When Investing in Real Estate

Investing in commercial properties is never a simple decision, especially in today's real estate market. Consulting with an experienced real estate attorney can help to prevent many possible complications. Since observing and learning from the mistakes of others is always a valuable tool, buyers should also be wary of these common real estate investment blunders.

1. Assuming a building is soundly constructed.

Just because a commercial property is new, doesn't mean it won't have any structural, electrical, or other problems. Builders can and do make mistakes. Buyers should insist upon a full inspection, no matter the age or obvious wear and tear on the building.

2. Failing to calculate rent sustainability.

Investors should keep in mind that property taxes are reassessed during a sale. This could raise operating costs, and therefore raise the rent paid by commercial tenants. Buyers should carefully evaluate current or prospective tenants' ability to actually pay the rent that will be necessary to cover expenses.

3. Going outside their comfort zone.

It is usually best for real estate investors to stick to the market they know, or seek advisement before venturing into a new type or geographical area of commercial real estate. Smart real estate investment decisions don't happy by accident; careful research and knowledge of the market are necessary in order to be successful.

4. Over-committing to a deal.

Sometimes, after investigating the investment from all angles, the numbers just don't add up. It's obviously not a smart deal, but buyers may be emotionally invested by this point. When this happens, they often go ahead and close the deal anyway – and regret it later.

Things to Avoid When Investing in Real Estate

Investing in commercial properties is never a simple decision, especially in today's real estate market. Consulting with an experienced real estate attorney can help to prevent many possible complications. Since observing and learning from the mistakes of others is always a valuable tool, buyers should also be wary of these common real estate investment blunders.

1. Assuming a building is soundly constructed.

Just because a commercial property is new, doesn't mean it won't have any structural, electrical, or other problems. Builders can and do make mistakes. Buyers should insist upon a full inspection, no matter the age or obvious wear and tear on the building.

2. Failing to calculate rent sustainability.

Investors should keep in mind that property taxes are reassessed during a sale. This could raise operating costs, and therefore raise the rent paid by commercial tenants. Buyers should carefully evaluate current or prospective tenants' ability to actually pay the rent that will be necessary to cover expenses.

3. Going outside their comfort zone.

It is usually best for real estate investors to stick to the market they know, or seek advisement before venturing into a new type or geographical area of commercial real estate. Smart real estate investment decisions don't happy by accident; careful research and knowledge of the market are necessary in order to be successful.

4. Over-committing to a deal.

Sometimes, after investigating the investment from all angles, the numbers just don't add up. It's obviously not a smart deal, but buyers may be emotionally invested by this point. When this happens, they often go ahead and close the deal anyway – and regret it later.

Disclaimer: The information above was prepared for general informational purposes only and does not constitute legal advice. It should not be relied upon or used as a substitute for seeking professional legal advice from an attorney. Readers should contact an attorney to obtain advice with respect to any particular legal matter. No reader should act or refrain from acting on the basis of any information in this article without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein-and your interpretation of it-is applicable or appropriate to your particular situation. Use of and access to this information does not create an attorney-client relationship.