Commercial real estate offers more upside than other types of investments, and it’s one of the most effective ways to protect your long-term wealth from inflation. But there are no “sure things” in real estate, and sometimes the best deals are the ones you pass up! Our team at Ferstl Valuation Services has been providing trusted real estate appraisals in Arkansas since 1967. We also offer professional real estate consultations, enabling you to support your investment decisions with high-quality research.
An investment analysis helps you determine whether the property you’re considering is the right fit and meets your specific risk and return requirements. Your analysis report will outline the relationship between the acquisition price of the property and the expected future benefits of the investment, all tailored to your unique financial situation and long-term goals. Here are three essential things you should always consider before making an official offer:
Is the property valued accurately? Commercial property values are heavily dependent on market conditions, particularly supply and demand. The recent sale price of comparable properties (commonly referred to as “comps”) can tell you a lot about the local market, and you should also review the property’s most recent appraisal report. You should never forget that if a deal sounds too good to be true, it probably is, and an independent appraisal can protect you from costly mistakes.
How much cash do you have on hand? One of the most significant benefits of owning commercial properties is receiving steady cash flow from rental income. Still, you’ll be responsible for servicing the mortgage when the property isn’t fully leased. You’ll also need to be sufficiently liquid to cover the costs of ongoing maintenance and the unexpected repairs that tend to come up at the most seemingly inopportune times.
What are your long-term plans for the property? The right property can be an excellent addition to your portfolio, but only if it fits your personal investment goals and risk tolerance. Flipping commercial properties can be highly lucrative, but you can’t always count on finding well-qualified buyers when you’re ready to sell. An investment analysis can help you decide whether to proceed with the investment or explore alternatives with stronger return-on-investment potential.
For more information about real estate appraisal services in Little Rock or to schedule an investment analysis, contact us online or at 501-375-1439.
