One of the most profitable investment strategies you can choose to pursue is to develop a portfolio of commercial real estate. Having a balanced portfolio of capital growth properties and cash flow properties can result in you reaching your financial goals faster.
However, like in any other business, there are many factors you need to consider before investing in commercial real estate, such as risk tolerance and time horizon.
Fortunately, Gus Dahleh, a renowned real estate investor that has over $50 million of commercial assets around the country has decided to share his insights and knowledge in the industry.
Gus Dahleh’s Definition of a Cash Flow Property:
To put it simply, this is a property. Your purchase would provide you with a monthly rental income that would cover any loan premiums, mortgage, and interests plus a little bit of profit if you’re lucky.
According to Gus, earning profits through monthly rentals would depend on how you can make the property’s value increase and appreciate.
Gus Dahleh’s Definition of a Capital Growth Property:
According to Gus, other properties that are not earning you monthly rentals are simply Capital Growth properties. The average growth of a property’s value is 8% in the country. And in 8 to 10 years, its value could be doubled the amount you paid without you doing anything. The only risk that you have to cover is the costs of retaining these properties as you wait for them to grow in value.
The opportunity to start building a commercial real estate portfolio always exists in you. However, for you to have a better start, here are some key factors straight from Gus Dahleh’s decade-long experience in the real estate industry.
Factors to take into consideration before buying an investment property for cash flow.
Location location location
The success or failure of a commercial real estate investment depends on your choice of location. To ensure the success of your investment, you need to purchase a property in an area of high demand, an area where the market demand will increase soon. Make use of business research and market forecasts in finding an ideal location.
The ability of the property to earn rent must play a big part in your decision. What constitutes a good location for an inexperienced investor could be very different from someone who knows what they’re doing.
For example, if you were to buy a property in an area surrounded by other commercial properties, then you will lose out on rent incomes due to the stiff competition in the area. While this can be considered a good investment since income can be assured, it isn’t the most ideal since your budget is limited.
Making the most out of your money should be your top priority when it comes to investing. Instead of choosing an area with tough competition, choose an area where there are fewer spaces available, this will allow you to control the rent that you can charge. Plus, the potential for expansion and development can yield you more money in the future.
Costs are going to be an important factor when looking for a successful investment. You want to make sure that the cash flow from the property will exceed the interest and taxes you have to pay on the property.
Even though we’re talking about rental properties, the possibility of the property appreciating is also something you should consider. If the property does increase in value it is just going to add to the equity of your existing property portfolio, this can be used as leverage to get funding for future investment opportunities.
About Gus Dahleh
Gus Dahleh is a real estate entrepreneur who specializes in commercial real estate development with a primary focus on distressed assets. Since 2010, Dahleh has acquired over $50 million of commercial real estate assets and entered into long term leases with JP Morgan Chase Bank, AT&T, Walmart, Sam’s Club, and Cubesmart.
Gus Dahleh has also developed a niche in the cell antenna industry by selling lease revenue to publicly traded REITS which include American Tower and SBA Communications Corp.
Gus Dahleh began his financial markets career as an equity options trader at the Chicago Board of Options Exchange. Gus Dahleh has developed proven option strategies for the U.S. 30 Year Treasury Bond and Gold Futures based on seasonal and technical patterns. Gus Dahleh has a proven track record for providing direction on how to maximize the value of the commercial real estate and financial market investments.