First it was the workforce. Then the healthcare system. And now real estate. Boomers are again making waves in the local and even the national economy by buying up commercial property at a heightened rate.
What’s behind the trend? It’s pretty simple: they need the money. For years, boomers saved for retirement the same way we do today: IRAs, 401ks and pensions—all of which depend on stocks. While historically stocks have been a pretty good investment when competently managed over the long haul, it would take someone still in it for the long haul to completely recover from the Great Recession in the 00s (a recession that cut their net worth by a third). And boomers, the youngest of which are in their 50s now, just don’t have that kind of time.
That’s where commercial real estate comes in. Looking to achieve the returns they had prior to the recession, boomers today are investing in property to provide a predictable cash flow and recapture losses.
If you find yourself among them, these tips from Coldwell Banker Commercial Advisors [www.cbcadvisors.com] can help.
#1 Develop a detailed plan. Make sure to address as many variables as possible. Questions about occupancy volume, projected earnings and tax rates should be answered before pulling the trigger on an investment opportunity.
#2 Don’t rush it. Like most long-term investments, it’s important to build a solid foundation before expecting a return.
#3 Crunch the numbers. Set a budget and stick to it. Establish a firm set of financial parameters that you can live with and make sure to stay within those parameters.
#4 Inspect the property. Develop an eagle eye when it comes to potential maintenance issues. Small cracks and leaks can lead to big financial liabilities later on.
#5 Pay attention to the local culture. Investing in a property is essentially investing in a community. Get to know the values of the people that live, work and play in your property’s community.
#6 Look for both national and local business tenants when possible. Recognize that national companies can bring in valuable traffic for local businesses. A good commercial property should strike a balance between national and local business.
#7 Discern the difference between good and bad tenants. Look for tenants who are passionate and motivated about their business. They’re the ones who will end up bringing in the customers.
#8 Use technology to fill your building. Today’s world offers a variety of resources to help you network and track down potential leads.
#9 Tune into the business world. Pay attention to commercial trends and use that information to court tenants who are on the cutting edge of commerce.
#10 Have an exit strategy. Establish a contingency plan for unforeseen circumstances. A good exit strategy can help minimize loss if things turn sour.
The most important step you can take before investing in commercial property is to consult with an agent who can help you through the process. They’ll bring the knowledge and experience to help you find the property that’s right for you and your objectives.