Commercial real estate (CRE) is an appealing investment class because of its consistent returns, passive income and growth potential. This sector of real estate investing is becoming more popular as an alternative to traditional investments; however, not all commercial properties are considered equal. For investors to succeed in buying and selling land for CRE properties, it’s vital to know when, what and how to invest before moving forward with a purchase. Here are a few key points for property investors to consider when buying and selling land in Cleveland and throughout Northeast Ohio.
Location is a crucial factor for profitability in the commercial real estate market. While proximity to amenities and scenic views are significant factors for residential property valuation, proximity to warehouses, freeways and tax-exempt areas plays an essential role in commercial property valuations. Along the same lines, when you’re considering a property’s location, the long-term view of how the area will evolve is an important consideration. To determine a neighborhood’s prospects, connect with the local government about zoning and urban planning. This move will give you a look into plans for the area in question and will help you decide whether a given CRE property is suitable for your investment.
Real estate valuation is vital for financing during the purchase. The asking price should be set at a price where an investor can earn the area’s prevailing cap rate for the commercial property type. Valuation determines how much lenders will lend you to finance your commercial property in the Greater Cleveland area. After choosing the property, valuation also drives the investor’s expected future rate of return.
CRE investors must ask themselves whether they’d prefer to invest in land that allows for new construction or has existing properties on site. New construction is an attractive option but comes with increased costs and risks. Existing properties may have the benefits of established amenities already in place (like utilities or landscaping) and may be more cost-effective than building new in the future.
In a perfect world, real estate investors would typically evaluate land and investment properties with respect to their expected income. However, it can be argued that all of these are affected by GDP because economic growth drives cap rates up or down accordingly. The real estate market cycle, which is a four-phase pattern through which commercial real estate and housing markets move, includes recovery, expansion, hyper supply and recession. Understanding the cycle can help you predict upcoming trends and make informed decisions about your investments. Conducting thorough research to determine potential risks of market saturation and other factors are key buying and selling land considerations for property investors.
Cushman & Wakefield | CRESCO Real Estate is a local, independent investment company specializing in commercial real estate in Greater Cleveland. To learn more about Cushman & Wakefield | CRESCO Real Estate and how we can help you invest in commercial real estate or buy or sell land in Northeast Ohio, please contact us today.
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