Avoiding Commercial Real Estate Investment Mistakes

As a commercial real estate investor in NYC, the process can feel almost overwhelming when it comes to locating new property.  Knowing some of the common mistakes of investors in this arena can help you avoid costly errors.  Some of the most common mistakes when it comes to purchasing or selling commercial real estate in NYC involve bad math, failure to do due diligence, inadequate market knowledge, and over-leveraging.

The four primary ways to succeed at the commercial real estate investment business in NYC are to focus on appreciation, cash flow, growth in equity, and tax benefits.  The balance sheet should always be reviewed and adjusted to best utilize the assets of a commercial real estate investor.

An experienced individual will also be wise to sever partnerships that are simply not working out.  Although every project has minor setbacks, be aware of situations that generate red flags often and early.  This can be a signal that you need to terminate the relationship.  You can prevent a majority of problems by crafting a good buy-sell agreement to start your partnership.  Even if you do not have an agreement in place, you could offer to pay for your partner’s interest or write down a sum that you would be willing to receive in return for your interest.  Knowing when to call it quits can be essential for success in the real estate arena.

Over-leveraging can be catastrophic for investors.  If the deal ends up requiring more expertise or capital than you are able to access, the project is likely to be frustrating and disappointing.  To prevent this, review specific property plans and always maintain a big picture view of your projects.  Being able to properly evaluate a project at its outset can save you time and money.