Flipping Commercial Properties
We all know about the residential real estate business of flipping a house. However, not many realize that the same thing can be done with commercial properties if you are looking to make a quick profit.
How does flipping work? Think about it in terms of residential properties. You buy a “fixer upper” and then renovate it, selling it for more than it was purchased for. The same thing happens with a commercial flip but the flip is a little riskier.
When you find a commercial property that you want to flip you would try to purchase well below the price that you believe it will be worth after renovations. This could be because a property needs renovations or because the property is undervalued for some reason. You would then purchase the property and make the necessary improvements and changes to bring it to a better value. Here’s where the risk comes in. Unlike home properties that can be flipped relatively quickly, commercial properties might not be as lucky. Commercial real estate can sit on the market for some time.
With risk comes great reward. With a commercial property, it is possible that the changes that are needed to make the property have a higher value are minimal. This means that the investment in changing the way the property looks might not cost as much but would reap a great reward.
When looking at a commercial property that you are considering flipping also consider the location of the property. Is it in a bad neighborhood? Or are there schools nearby? Whatever surrounds the building will influence how much it will sell for greatly. If you can find a property that needs minimal changes in a great place then you’re looking at a great investment.
There are pros and cons to flipping but if you are looking to make a substantial profit then flipping commercial real estate could be for you. Just remember that location matters and though you might have to wait to sell your property it will sell and with that your investment will pay off.
Call Alex Biliouris (401) 352-4607 so he can put his extensive experience investing in real estate to work for you!