Unlike playing games with the stock market or gambling away thousands of dollars at the casino, real estate investments promises years of long term financial wealth. Yet, as impressive as it is to be an investor, many people aren’t aware of the various benefits that comes with finding growth in real estate.  The key trait of commercial real estate includes simplicity and stability for an investor that can help outweigh any short term problem that may come their way. Think of owning land as being in charge of a long term asset that is safe if managed right. You can unlock the key of passive income growth and benefiting your community if you consistently make strategic decisions.

Before jump into purchasing a piece of commercial land, understanding what your ultimate goal is for owning the land is crucial. Regardless of where you live, the process of acquiring a property is drawn out and can be tiring at many times. Some people want widely different things when it comes to property development. In fact, investors can have drastically different approaches to even buying the land and having the situation in their favor. Let’s go over the different ways investors typically acquire land so you can judge which method is the most appropriate for you.

Buying For Property Development

It’s critical to know what the key methods are for buying your dream commercial real estate investment now and in the future. Smart real estate investors will want to know all they can in these matters as a lot of their precious time, hard earned money, and hefty pieces of regulation are involved when buying any piece of land. Some strategies to consider when buying a property include:

• Buying and selling: This is the method that you might be the most familiar with as it’s called “flipping” the property by investors. The process is simple as you purchase a property below the alleged market value, renovate what you need on the interior or exterior, and find a find a buyer who is willing to pay you for the property above said market value. Commercial real estate investors in this case are always hoping to have a quick sale and a fast return of profits on their work. However, the risk always lies in finding a buyer who is willing to work in your favor. Failed attempts at flipping properties often end up in vacancy and thousands of dollars lost to mortgages to finance it. Be sure about your pricing and don’t take any giant risks in overvaluing your property.
• Buying and holding: In this approach, a commercial real estate investor will buy the land and hold onto it for a certain period of time. This may work in their favor if they believe that the piece of land will consistently appreciate in value. However, during this process the investor will still have to manage the property, pall all the taxes tied to it, and pay any other operational costs. Overall, the main goal of the investor is to purchase the land with the hope that they can pass it off to a developer in a few years when the area starts to improve.
• Buying and going through the entitlement process.During this process, an investor will buy a property then complete the process of having it zoned for their goal use. Maybe a certain piece of land is meant for commercial sale, while another is for residential usage. It’s required to check what the zone restrictions are for the property before making any big decisions here. An investor will only be able to make a plot of land more valuable to potential developers if they can get it rezoned.
• Buying, developing, then renting out. If a real estate investor wants to develop their land initially after purchase so they can increase its market value, they will typically hold off from finding any possible renters. For example, maybe you want to add a larger parking lot to a strip mall property or refinish the exterior of store fronts so it increases its wholesale value. Then, being more attracted to these renovations, a business owner may ask you to rent a portion of the propertyand in turn provide you an elevated level of profit you’re looking for.

Be Risk Averse With Property Development 

It takes real grit, dedication, and lots of resources to be a successful commercial real estate investor. It also takes the right information and decisions to prevent major mishaps from preventing full profit potential from a commercial real estate investment. Once you get into the process of looking at a potential property, you may discover that there are many government restrictions or renovation related challenges linked to developing it thoroughly. You could also run the risk of dealing with natural disasters or peaks like ground degradation or flooding. You may even realize that the tax rates are far too area because of the location compared to what the actual value of the property. On average, larger and more metropolitan cities bring sky high tax rates compared to more rural counties. Some states may also vary drastically with their home ownership association fees and property tax fees as well.

As a result, be as risk averse as you can and learn about all the traits that a good property investment includes. You may learn that your former beliefs about commercial real estate investing were either slightly flawed or totally inaccurate. You’ll sleep better at night after knowing the best strategies to buy your real estate investment depending on your time frame and financial situation, to develop it to increase its market value, and to market it well enough to attract an affluent and long term customer.