Читать книгу Commercial Real Estate Investing For Dummies - Peter Harris - Страница 67

When demand is high for certain commercial real estate, value goes up. Your job as the investor is to find out why. Why is demand high? What’s driving the demand? Is it the influx of companies moving in or expanding in the area? Is it the explosion of retail shopping due to the influx of young families and professionals? Find out what’s going on.

See where you are in the real estate cycle. Are you in a rising market, at the top of the market, or in a down market? If you’re in a rising market, values will increase. Ride it to the top, and then make a decision to sell or wait for the inevitable downward trend. The downward trend is absolutely okay if the property sustains itself and cash flows well. If you find yourself on the downward trend, get out before you lose too much value or weather the storm and think long term.

Keep in mind that supply and demand come in cycles. And because of this, property values will be cyclical as well. (Study the real estate cycle in Chapter 2, which will help you see where your market is currently and how values are affected by supply-and-demand situations.) Here’s how you can time the market to ride the wave of increasing value:

 Watch prices. If the downward trend has stopped, you’ve reached bottom or almost bottom. It’s time to buy and ride the wave back up.

 Watch job reports. When job growth is positive, it’s time to ride the wave.

 Watch investors. When you see other investors come in and start investing heavily early, it’s time to jump in with them.

However, there are pitfalls to valuing the market by watching rising prices, positive job growth, and outside investors. Here are some of those pitfalls:

 You waited too long. Determining exactly when the upward wave starts isn’t easy. If you wait for signs that are too obvious, you can miss the wave entirely. You have to start paddling at some point or you'll have to wave that wave goodbye.

 You misjudged the wave. What you thought was a wave, was just a ripple. Oops.

 You got greedy. People tend to get overly confident when the market just keeps going up and up and up. But what goes up must come down at some point. So, if you wait too long, you may miss your run at the profits.

Certain neighborhoods or districts are better bets than others for commercial real estate, especially if they’re in the path of progress (see Chapter 16 for more on locating the path to progress in your city). New construction and revitalization including changes such as trendy shops or new restaurants are all associated with instilling new life into a neighborhood or district. If you witness an area undergoing any of these, you can bet the real estate values there will be impacted positively.

The success of a shopping center, for example, largely depends on its location. You can fix parking lots and physical appearance, but you can’t fix poor location. A great location combined with well-selected stores equals long-term success and a superb investment.