New year a good time for a real estate investment tuneup
Since many people start off the new year with new resolutions, why not resolve to make your real estate investments more stable and prosperous in 2017?
Start by asking yourself questions that could improve your investments. Why do you own that specific investment? Was it a property you purchased to house your business? To create an income stream? Was it inherited? Did you end up with it in a divorce?
Here are some additional questions to consider. Who manages the property? Are you receiving market rents? Are you getting any rent at all? Does the property have deferred maintenance items that need to be corrected before the next heavy rain? Is it too late and the damage already done? Is the property a liability or an asset?
Real estate investments should constitute assets that build net worth and provide additional income for businesses or families. But for a large group of property owners, those assets are in fact liabilities that cost owners — on a monthly or annual basis — more money than they bring in. Why not make 2017 the year you turn this liability into an asset? It could be easier than you think. If not, then it might be time to sell that alligator to someone else and reinvest in a stable income property.
Continue the process by enlisting the help of a real estate investment specialist. How do you find one? Most real estate brokers with the Certified Commercial Investment Member (CCIM) designation behind their names understand investment analysis. That’s a good start. It also helps that a CCIM is active in helping people acquire and sell income investments and manage them.
Complete a highest and best use analysis on existing properties that are under water in terms of investment returns. It could be necessary to develop a plan to upgrade the property to make it more attractive to the right type of tenants. Evaluate existing tenancies to see if they’re paying market rents for the spaces occupied. Each of these changes take some time and could require adding significant investment capital to the investment.
In some cases, it could be best to tear down existing structures and market the property for an entirely different use. This often occurs in areas with old, under-utilized structures on them that could be razed to make room for a new drug store chain, auto parts franchise or quick-serve restaurant.
Times change, and it could be time to make that major change to your property. Call your commercial real estate broker and begin to make changes that turn your liability into a thriving asset.