The primary goal of any commercial real estate investor is to make a valuable return on your investment. Whether its office buildings, apartments, or hotels, you’re often taking a leap of faith when it comes to putting your money into these properties.
However, one common problem that investors face in this current market is making an investment in a property riddled with debt. Unfortunately, this can put you or your company’s financial wellbeing at risk. Whether you took on debts when you bought the property or they accumulated afterwards, it can certainly put a damper on any profits you hope to make.
Although your property may carry great debt, that doesn’t mean it can’t turn a profit. After all, there is potential in all sorts of unlikely places. You just need a plan to make the profit come to life.
Consider Your Fees
If the property you own that is saddled with debt is one that has commercial or residential tenants, you may need to assess what you are charging and see if it is feasible to raise those prices. You will of course need to keep in mind the average prices in the area and the amenities your building offers, but in some cases a little extra rent can help you cover debts while also turning a profit.
Sell the Property at the Right Time
Once the appreciation value goes up, it's best to sell the property immediately. This will help you to get a bigger return on investment; especially if the location of the building is prime.
Market and Advertise
After you've purchased your commercial building, it's time to get the word out there. Market and advertise your business so other tenants know it's available. This will help to bring in some additional revenue and eliminate accruing debt. Some find it helpful to post online, host welcoming parties, or even post ads in their local newspaper. These are all designed to build a buzz around the building and get others excited.
Lease Different Aspects of the Building
Charging a leasing fee for potential tenants is a great way to expand the commercial property while still increasing your revenue. For example, if you have an apartment building, lease a retail space underneath it. If you have a restaurant on a large enough lot, build a coffee shop next to it. Be creative with what you choose to lease. This will help you to further develop the building and then hopefully bring in enough revenue to cover the debt.
Invest in the Property
It may seem counterintuitive to make a profit by investing more money in a debt-ridden building, but the best way to reverse the signs of debt is to put some effort into how the building looks. By doing so, others are automatically drawn to it. In turn, it'll open up the door for potential investments.
Put money into the decor, the paint, and even the exterior so that it looks its absolute best. Visitors will see the building and automatically want to invest. Hiring a talented landscaper to keep up with the daily maintenance will give your commercial property the glow it needs. This extra effort will help you to dig the building out of debt and start creating a profit.
Pay Down the Debt
Prior to setting the commercial building up for the shop, you may want to consider paying down the existing debt. Once you've gotten it under control, you're able now to focus solely on making a profit. Set up a payment plan that will allow you to keep up with the current payments while still investing in the company.
Prior to making this big financial purchase, it's best to consider a few valuable points. First, is the building worth the time, effort, and money you’ll be putting into it? Do you think you'll be able to pull yourself out of debt and start making a profit? Next, consider the area you're thinking about investing in. Is it a place that's booming with activity? Do you think the area will improve over time? If so, by all means, take the risk and make the purchase. You're guaranteed to make a better financial decision once you've weighed the costs.
The process of digging yourself out of debt and earning a valuable profit is a hard one indeed. However, with the proper planning and financial guidance, you can make it happen. The experts of Landwin Commercial Real Estate are skilled in helping investors purchase commercial real estate that helps them earn a profit. Call today to learn more!