Top Mistakes of Experienced Commercial Real Estate Investors

May 19, 2012 by  
Filed under Commercial Real Estate Tips

commercial real estate investor

Top Mistakes of Experienced Commercial Real Estate Investors

Investing into commercial real estate is a good investment decision that will bring in many profits in the future. However, though this is a good investment opportunity, there are pitfalls that investors need to be wary of.

Here is a look at key areas in which real estate investors need to keep a keen eye.

1. Failing in the balance sheet duty: The four ways to make good money in real estate are cash flow, appreciation, growth in equities and tax benefits. An operating statement reflects only the cash flow while the balance sheet reflects the other three. Thus one must manage one’s balance sheet skillfully. The point to be kept in mind is that what is important is not the ROI (return on investment), but the ROE (return on equity).

2. Dealing with bad partners and bad deals: Warren Buffet said, “The first rule of investing is to not lose.” Taking this advice means learning to identify a weak spot and then wriggling out of it as early as possible.

Whether it is a lousy deal or a lousy partner, if one senses that putting one’s heart and soul into an investment will be a wild goose chase, it is best to abandon such a case.

3. Trying to reach beyond one’s means: One needs to realize one’s potential as well as the potential of a certain plan. Getting over-ambitious is never a good idea.

4. All kind, no cash: Having more land than the money to cover it is a common mistake and should be avoided.

5. Ignoring local market knowledge: Real estate events are always local events. News at the national or international level matter little in this case.

6. Learning to accept responsibility: Instead of blaming the market or the tenant or the partner, learn to taking a good look at oneself is a lesson to be practiced.

About Author:
Pauline Go is an online leading expert in real estate. She also offers top quality articles like :
Apartment Listing, Packing Checklist

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