If you are a first-time investor and considering Commercial Real Estate (CRE), there’s one crucial thing to consider. Not every commercial real estate market is created equal; like any asset class, parts of the industry are undervalued, overvalued, or in the middle.
Investors considering commercial real estate should keep in mind that in a country as large as the U.S., commercial real estate prices and valuations can vary dramatically from state to state and city to city. While the most mature markets are in cities such as New York City, Atlanta, or Nashville, the best opportunities may be in suburban communities. For example, instead of Nashville (Davidson County), investors may want to look at Rutherford County (just outside Nashville), where commercial real estate prices are comparably cheaper.
It’s essential to understand the local market and what economic or demographic trends may play a role in driving the value of commercial real estate properties up or down.
- Is the local population growing?
- Are there infrastructure projects in development that could make the property more profitable?
- Any new developments in the community that may add value?
The answers to those types of questions can mean the difference between a small loss and a considerable return.
This commercial real estate industry offers an excellent opportunity for investors seeking to weather the turbulent markets ahead and expand their real estate portfolio.
It’s an ever-expanding market with an attractive risk-reward if handled strategically.