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What you need to know before investing in commercial real estate

On Behalf of | Dec 2, 2022 | Commercial Real Estate

If you’re thinking about jumping into the commercial real estate game in Mississippi, you should know that there are some significant risks as well as benefits. No matter what your level of experience is, it’s always helpful to go back to the investing basics. Make sure to follow your due diligence rules and make only sound investments that are informed by strong principles.

Know when to make your move

Keep your eye on market trends so you’ll know when to act. Once you’ve learned how to spot trends in the commercial real estate market, you’ll be better poised to make your move when opportunity strikes.

Some of the strategies that investors might use in the stock market will also work for commercial real estate. But make no mistake – the two markets couldn’t be more different from one another, although investors face similar risks in both.

Why do people play the commercial real estate game?

Many investors want to break into commercial real estate because it’s an attractive investment option, which is owed to a confluence of benefits. The returns tend to be higher, and there are tax benefits for those who invest in various property types and asset classes.

Common examples of commercial property types include:

  • Storage facilities
  • Shopping centers
  • Apartment complexes
  • Offices

It takes commitment

Something you’ll definitely want to make sure of before getting yourself into a commercial real estate deal is that you’re truly in it for the long haul. Commercial real estate is a long-term investment. It’s an illiquid asset, which means you’ll probably have money tied up in the property for a long time.

With illiquid investments, the returns are higher over a long time period. You don’t have to deal with the same daily price volatility that you get with other types of investments.

Sometimes, however, the barrier to entry for commercial real estate is too high. This has made it so some investors aren’t ever able to break in.

This unique form of investing gives you an edge in certain ways but also has its risks, as is the case when you invest in anything. It’s highly advisable that you have a firm understanding of both before taking the leap.