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Protect yourself against commercial real estate investment errors

Commercial real estate can be a viable business interest for entrepreneurs and investors, but if you're looking to get your toes wet in this industry, it's a good idea to learn about some common beginning mistakes. Errors now can cost you a lot of money, time and stress in the future, so you might want to surround yourself with strong financial and legal professionals who understand the business and can guide you toward safe, profitable decisions.

One common mistake people make as they enter the commercial real estate market is failing to perform due diligence before signing a contract or making a move on a property or project. It's not enough to inspect the property or check out the people you are getting into business with, though both of those steps are important. You also need a deep well of knowledge to draw from regarding zoning laws, insurance requirements, tax law, accounting and contracts. Failing to understand how each of these areas might influence a property or project can mean major economic loss for a project or unplanned delays.

Another big mistake people make when conducting real estate deals is the failure to leave themselves more than one exit strategy. Nothing is guaranteed when you deal in real estate, and if a project or purchase isn't working out, you might want out of the deal. If you signed a contract without favorable exit strategies, you could find your accounts hit hard if you decide to buy your way out.

A lawyer experienced in commercial real estate can help you research and understand all the details and negotiate contracts that ensure protection and exit strategies. Before you dive into the commercial real estate waters, make sure you have a life vest in the form of strong professional teams.

Source: CRE Online, "Top 5 Mistakes of Beginning Commercial Real Estate Investors," Ray Alcorn, accessed Dec. 02, 2016

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