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Investing in commercial real estate means risk and maybe reward

The thing about money is that most people, no matter how much they have, don't think they have enough. That means they're looking for ways to make more. For many people in Alberta, the answer has been investing in property. Although flipping homes is a common method, commercial real estate can also sometimes provide a good return.

Experts on making money through real estate argue that, though there are risks involved, acquiring commercial property can be a good investment. For example, purchasing a stand-alone building may provide good opportunities for income and could make sense for someone who runs their own business. By taking advantage of the space and leasing what's left over to other businesses, or renting apartments to residential tenants, it may be possible to finance the ongoing cost of owning the space one works from, and even turn a profit over time.

Inherent risks in such a strategy include underestimating the cost of any renovations required, and ongoing maintenance. An older or historic building, for instance, may require more remediation than may be evident at first. Making sure the zoning is appropriate for the use in mind is also important.

For those looking to make a splash as a landlord, purchasing a small strip mall or an apartment complex might be just the thing. A facility that is already tenanted can start generating income right away. Researching the neighbourhood may help to recognize the true potential of a property. Investors in these types of buildings should be ready to keep them fixed up; a shoddy-looking building won't bring in new business, or keep existing tenants around for long.

The purchase of commercial real estate as an investment is never without risk. With a well-formulated plan and dedication, however, it may be possible to reap the rewards every investor seeks. Part of a good strategy might involve working with an Alberta real estate law firm. Professionals who know the market and the law may be able to offer valuable assistance when properties are considered and deals are made.

Source: reincanada.com, "Five ways the wealthy become wealthier with real estate", Dianne Maley, Feb. 2, 2017

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