When it comes to investing in commercial real estate, there are many factors that determine your final return – but just how important is the price of a property? Perhaps not as much as you think. Learn why in the following sections, and discover how our seasoned Naperville commercial real estate lawyers can provide you with additional leverage in your next CRE transaction.
Examining the Relevancy of Price in a CRE Transaction
While, ultimately, price does have an impact your bottom line in a real estate transaction, it may be far from the most important factor. Instead, matters like taxation, the potential long-term return on investment (ROI), utility costs, and other relevant issues may ultimately trump the importance of price on an investment property. As an example, consider the growth of Wham!, which started out at around $2.5 million for 50,000 square feet of space, but now weighs in around $11.5 million. If the investors who started out in this industry had been concerned about price in the beginning, they might have missed out on a highly profitable opportunity.
Other Factors That May Trump Price in a CRE Transaction
Investments like Wham! can and do occur in the CRE world, but lightening strikes like it tend to be few and far between. Still, that does not mean that price should be your primary focus in a CRE transaction. Instead, consider some of the other factors that may trump the price, such as:
When purchasing commercial real estate, you can either look at the immediate costs, or you can consider the space’s long-term utilization opportunity. Many business owners will consider their long-term growth and would rather find a space that can fit their expansion needs, over time. To them, this may be preferable to renting out a smaller space and risking stymied growth while trying to search for a bigger location. These are the companies that you want to appeal to as a CRE investor.
Taxes can take a significant chunk of any profits you may reap after selling a property, which is another reason you should carefully consider the long-term utility of a space before your purchase. You might also be able to reap the tax benefits of depreciation in certain situations, which can save you tremendously over time.
Contact Our Naperville Commercial Real Estate Lawyers
When it comes to real estate investment, there are many factors that can impact your bottom line. At Lindell & Tessitore, P.C., we assist you in examining them all. Seasoned and experienced, our Naperville commercial real estate attorneys are the ones to call before you invest. Schedule an appointment with our offices by dialing 630-778-3818 today.