This document discusses how investing in commercial real estate during a down market can be profitable. It provides five tips for ensuring investments made during down markets will generate returns. The tips are to recognize the benefits of lower prices and interest rates, study the location's trends and upcoming developments, analyze average lease rates compared to carrying costs, inspect the property for issues like contamination or code compliance, and understand the specific type of commercial property being invested in. Following these tips can help investors confidently purchase properties that will appreciate and generate income even in a down market.

1. How Investing in a Down Market
Can Pay Off

2. Historically low interest rates and surplus resale
commercial property have made this an ideal
time to plan for future growth and make
profitable long-term investments in commercial
real estate.

3. There are several benefits to having solid
investment strategies in any market, but the
following five tips can help you ensure that the
properties you select will make you money now
and in the future.

4. Recognize the Benefits of Investing in
a Down Market:
When investing in a down market, the obvious
benefits such as low interest rates and falling
property values attract many
budding investors. The less
obvious benefits are equally
attractive when investing
in commercial property.
Those benefits include job
creation, community
revitalization and civic pride

5. Property investors in a depressed market realize
that there is substantial room for financial
growth through gradual appreciation in property
values over time.

6. Study the Location: There is no science in
predicting the direction a neighborhood is going
to take. However, you can make some educated
guesses based on current municipal plans. There
are other clues that should
influence your decision.
Are prominent businesses
attracted to the area? How
about upcoming developments
scheduled for the area? By closely analyzing
neighborhood trends, you can better ensure the
appreciation of your investment.

7. Look at Average Lease Rates: If you are looking at
tenanted properties, you need to compare the
average lease rate for your area and the cost of
carrying your investment. When investing in
property, the lease value should be equal to or
greater than the cost of carrying the building. After
you calculate the costs of financing, utilities, taxes
and maintenance, compare that figure to the
amount of money generated by the potential rental
income. If this figure is not equal to or greater than
the carrying costs, you will lose money on your
investment, making the property a poor choice.

8. Study the Structure: Every resale building has a
unique history. That history can result in issues
such as environmental contamination, structural
deficiencies, failure to
account for accessibility
standards and other
issues that could limit
potential tenants. These
issues can be expensive to remedy and prevent
you from realizing a profit on your investment.

9. Understand the Property Type: Investors who
specialize in specific types of properties know
everything about the type of property they
invest in. Residential, commercial retail, office
and industrial properties all have unique
features, rules and regulations that have to be
understood.

10. Investors should have an understanding of the
building type they are investing in, in order to
ensure the continued profitability of the
investment property. By knowing everything
that you can about the
structure, location, income potential and type of
property most likely to be profitable, you can be
confident when investing in a down market and
in the future.

11. Randy Bett
www.BetterGroupRealEstate.ca