The commercial real estate industry employs about 3.9 million people as of 2023. Because of this growing figure, investing in a new property is a lucrative way to grow your portfolio.
Here, we’re going to talk about how you can find and invest in the right commercial properties in Orange County, CA. Read on for some tips, tricks, and advice to ensure that you diversify your assets the right way.
Determine Your Objectives
There are three core reasons that people invest in commercial real estate. These are safety, capital gains, and income.
Safety is basically when people invest in something to diversify their portfolio. If you’ve already invested in the stock market, you’ve risked money on those stocks. The company you invested in could fail, which would lose you a lot of money.
But diversifying means that you’ll have other investments that could still pay off. Real estate is a tangible asset, meaning that it holds intrinsic value (though this value can fluctuate with its condition, location, and market value). It’s a more secure investment than volatile alternatives.
Capital gains come from the sale of an asset. People buying property may be doing so to flip it, meaning that they’ll fix it up and sell it again for more money.
If this is your goal, you’ll need to do a lot of upfront research about maintenance costs and how much you can sell it for later. You’ll need to compare the costs and potential gains.
Many people also get capital gains several years down the line after generating income, so this is a long-term goal for some people who primarily are investing for passive income.
Generating income is one of the biggest objectives for commercial property investors. This usually comes in the form of renting it out to businesses and organizations. You’ll want to figure out how much you can charge in rent based on market trends, location, building condition, and building layout.
Look at All Available Options
Look into multiple types of property, including:
- Office spaces
- Retail venues
- Industrial locations
Determine which will best help you meet your objectives.
Once you know what type of property you want, you can begin to look at available properties in Orange County, CA. Don’t get set on a single property. Exploring multiple options with an open mind means that you can compare and contrast various investments to find the most lucrative one.
As you examine and bookmark potential investments, you’ll need to consider what makes a property valuable.
Decide on a Location
Profitable investments need to be accessible and well-developed.
Orange County is fairly large and has multiple areas. Some places have better infrastructure than others, meaning that it will be easier to find tenants willing to pay rent. You’ll also be able to sell it later for more money.
It also will be easier to conduct repairs on the property if you’re in a well-constructed area. While it may cost more upfront to purchase a commercial property in Irvine or Newport Beach, it will ultimately pay off since people want to work and commute there.
Value the Condition
You can probably find dilapidated, run-down commercial investments for a really low price. Unfortunately, you’d also need to pay for extensive repairs to get them back in good condition. This is almost never worth it, especially because it would take so much time and labor.
Make sure that you go to the property in person and assess its condition. If the structural foundation of a building doesn’t look sturdy or it has excessive water damage, you might want to look elsewhere. People won’t want to pay to rent out a poorly-maintained space, so you could be looking at months or years of maintenance before bringing in any kind of ROI.
Examine the Space
Once you find a property that looks promising, thoroughly examine its layout. The arrangement of a commercial property will impact how effective it is for businesses to operate there. If people won’t like the layout, it’s not a good investment choice regardless of the building condition.
At this point, you’ll also need to talk with professionals about coding and projects. Make sure that the building layout is free of hazards and up to legal regulations. See what you’d need to do to fix it if not and make sure that you can get permission from the necessary authorities.
This will give you the full picture of your investment and let you know what you might need to do to get a high return.
All investments come with risk.
High-risk investments tend to pay off more, but they also can fail. That’s why diversifying your portfolio is so important. If one investment doesn’t pay off, another will keep you afloat.
It’s important to consider how risky investing in a specific property is before you put any money into it. This means looking into the area’s commercial property market, the history of the specific building, and market trends within the industry.
Be Mindful of Your Budget
While it’s better to pay a higher upfront cost to save money later, you also don’t want to overspend. Make sure that you stick to the budget that you originally set. Incorporate any immediate maintenance that you deem necessary into the upfront budget, too.
If you’re not careful of how much you spend, you might end up with insufficient funds for maintenance and upkeep. This is a surefire way to make your investment fail, so avoid it by calculating all costs accurately. If you’re unsure of anything, you can also talk with a financial advisor.
Invest in Commercial Properties Today
Buying property is a good way to obtain passive income, access a tangible asset, and ultimately turn a profit. Now that you know how to find commercial properties in Orange County, CA, it’s time to get started.
Our experts are excited to help you find retail venues, office spaces, warehouses, and more in the area. If you’re looking to buy or sell commercial real estate, contact us online or call (877) 775-9625 for more information.