Commercial Realty
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May 5, 2010

While there’s been a lot of talk in the media about what’s happening in real estate these days, this much is certain…commercial real estate has proven to be one of the greatest creators of wealth in history.

While it’s true that the markets will change and that there will be times when appreciation happens faster than at other times, buying commercial real estate based on sound fundamentals in any market has paid off handsomely for seasoned investors in the long run. 

Compare investing in commercial real estate, for example, with investing in the stock market. While great money can be made in the stock market, you’ve got much less control over what may be happening with your investment. You can buy into a stock and sell out of it very easily, but how much control do you really have over what’s going on behind the scenes within any company you invest in? You’re relying on the information that’s supplied to you by company management, and we’ve seen how unreliable that information can be to investors in recent times. Some stocks have been trading at inflated values based upon what management had been telling the public, and then in the end we’ve found out that these same companies were worth only a fraction of what everyone had believed. 

When you’re a knowledgeable real estate investor and you do your homework, this really doesn’t happen in commercial real estate—because you know what’s going on with all of your properties all the time. As a commercial real estate investor you’re in complete control, and when you do your due diligence you have all the information you need to make the right decisions. You’re not relying on company management telling you how great the company is doing, and why they’re such a solid investment for you. But you still need to understand the market and what represents a solid real estate investment opportunity.

The most successful commercial real estate investors in the business recognize that transitioning times present great investment opportunities for them. When people are selling their property because they need the money, and not because they were offered an incredible price they thought they’d never get for it, great investment opportunities start getting more abundant. The expression “buy low and sell high” definitely applies to commercial real estate investing, and buying low means buying in times when many other investors aren’t very excited about the market. And buying low also means you’ll reap far greater rewards than anyone else when the real estate market heats up again. So pay attention to the investment opportunities that will be coming your way. 

Any investor can make money in real estate when times are great, but the investors who buy during the more difficult times are the ones who make more money than anyone else. And when the real estate market gets better once again these are the investors who will realize the greatest gains on their investments, while all the other investors who got into the market later on will have purchased their properties for higher prices. So look for these opportunities that will be coming your way, capitalize on them, and you’ll do what the savviest real estate investors have always done…buy low to position yourself to sell high later on when the timing is perfect.

(For more information on anything you read in this space you may contact James Barnett, CCIM by e-mail at jbarnett@ccim.net or by telephone at 276.656.3538)



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