You may be thinking about investing in a commercial property, but do you know what components make up your investment?
Obviously money is one factor, but what other aspects are important to the success of your investment? Without getting too complicated here is a simple sum that may help:
Equity + Debt + Time + Thinking = Investment
Equity relates to the availability of money, but not just in terms of cash. You could look at financing, such as loans, venture capital or commercial mortgages. There are a number of options to help you reach the level of equity that you need to make your commercial investment.
When taking on an investment opportunity, the debt that it may carry should always be at the forefront of your mind. You should think about the best rate and fees you are getting on your financing, but also think about adding some flexibility to it, such as payment holidays and clauses. This will give you some freedom to put into practice some of the later aspects of this sum.
You will need to commit time to your investment right from the start. It is a good idea to research the market, neighbourhood etc, prior to investing. Once the purchase is completed, you will still need to commit your time, but also remain patient at that same time as a return on your investment won’t happen overnight.
To make the most out of your investment, you should be thinking how to get the most out of the property you have purchased; this could be in a number of ways such as: subdividing, change of use, redeveloping and upgrading energy efficiency.
So whether you are thinking about investing in a commercial property or have done so recently, keep this simple sum in your mind to help you achieve the return on your investment that you desire.
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