Matthew Benning
Flipping properties has become a popular way to earn substantial profits, and while residential real estate has been the focus for many flippers, commercial real estate can offer promising opportunities as well. Despite the challenges posed by the pandemic, the commercial sector is on its way to recovery, making it an attractive option for those looking to flip properties. In this article, we will explore four essential tips to keep in mind when flipping commercial real estate, including building a strong network, considering the investment value of the neighborhood, focusing on foundational aspects, and maintaining a strong online presence.
1. Build a Network of Industry Professionals
To increase your chances of success in commercial real estate flipping, it is vital to establish connections with brokers, bankers, agents, attorneys, and potential buyers. These stakeholders can provide valuable insights and information, helping you anticipate the specific requirements of potential buyers or tenants before investing your resources. By nurturing relationships with these professionals, you gain access to exclusive opportunities, such as foreclosed or repossessed properties that have just hit the market. Being the first to know about such properties can give you a competitive advantage over other flippers.
“To limit unnecessary bills and maximize the usability of a space, it’s best to keep in touch with stakeholders like brokers, buyers, and attorneys.”
2. Consider the Investment Value of the Neighborhood
When flipping commercial real estate, it’s important to remember that you’re not just selling the property itself but also the neighborhood it is located in. The value of a property can be significantly influenced by factors such as crime rates, accessibility, and proximity to other amenities. To assess the long-term equity potential of a property, it is essential to not only study current sales rates but also research future developments in the area. Inquire about any planned amenities or municipal efforts that may positively impact the neighborhood. This information will help you make informed decisions about the value of a property in the long run.
3. Focus on Foundational Aspects
While the external appearance of a property may catch the eye, it’s the foundational aspects that truly matter. Superficial issues are relatively easy to fix, but problems with the property’s understructure can be both dangerous and costly. When selecting a property for flipping, prioritize factors such as internal support systems, original features, and architecture. Crucial features include HVAC, plumbing, insulation, and digitally-optimized wiring and connectivity. These features not only provide essential amenities for potential tenants but can also significantly increase the property’s value. Additionally, cosmetic upgrades like a fresh coat of paint can be a cost-effective way to enhance the property’s appeal.
4. Establish a Strong Online Presence
In today’s digital age, having an online presence is crucial for attracting prospective buyers or tenants. The majority of buyers and renters use their mobile devices and social media to search for properties, yet the real estate industry remains one of the least digitized globally. By actively maintaining an accurate and engaging online presence, you can make your services and properties more accessible to the mobile-first audience. Utilize relevant platforms to showcase your properties, share updates, and engage with potential clients. This will enhance your marketing efforts and increase the visibility and attractiveness of your properties.
Conclusion
Flipping commercial real estate can be a profitable venture if approached strategically. By building a strong network of industry professionals, considering the investment value of the neighborhood, focusing on foundational aspects, and establishing a strong online presence, you increase your chances of success in this competitive market. Although there are risks associated with flipping properties, conducting thorough research, prioritizing key factors, and staying agile in response to market trends can help mitigate these risks and lead to a profitable outcome.
