Real estate is an attractive stepping stone for aspiring investors in Florida. This arena is relatively straightforward and somewhat relatable.
Of all the types of investment in this field, retail real estate is one of the more popular for it is income-producing. If you own it, you get to collect rent, which you can use to pay off your mortgage if you take out one and passively grow your wealth through capital appreciation.
To pay as less money as possible, rookie investors target a Broward County property foreclosure. Such a piece of real estate is grossly undersold, maximizing a buyer’s potential profit.
But retail foreclosures are not without risks. To calculate them and to walk away with a favorable deal, follow these tips:
First of all, ask yourself if you are sure that you want to buy a foreclosed property? The fact that its previous owner lost the space can be a red flag. Of course, that person might have lost the property to foreclosure for reasons unrelated to its business value.
Whatever the reason why your prospective retail space is back on the market, take your time to know its history. Also, pay attention to its location; it can provide clues about why the owner went bankrupt or her or his mortgage turned upside down.
Like commercial properties, retail spaces have a unique set of drivers of their economic viability. In addition to the location, the population growth and density, relative income levels of residents are what dictates the demand for retail properties. Use these drivers as your guide when comparing foreclosed properties.
Find the Anchor
Every retail real estate district has an anchor store, which is a big establishment that magnetizes customers. A well-known anchor store helps increase foot and vehicular traffic in the area. In most cases, the anchor store tells you which kinds of businesses can thrive in a particular location.
Do not approach lenders unless you have the funds to close the sale when given the opportunity. You do not necessarily need to secure financing right away; request for pre-approval to know your purchasing power without entering a contract.
Once your loan application has been pre-approved, start visiting retail foreclosures. Use the maximum loan amount you got approved for to narrow your property options, but do not negotiate for a deal like you are ready to spend all of it.
You need to stay liquid to cover the cost of possible repairs and early mortgage payments until you begin collecting rent.
Join Auctions with Caution
Many retail foreclosures can be found on the auction block. Consider participating in the bid but proceed cautiously. In an auction, avoid making an offer unless you know exactly the property you and understand how much you are willing to pay for it.
Buy Directly from the Lender
You can also talk to the lender that has the lien on the retail foreclosure. Since it is likely that you will not be the only interested buyer for the property, you may have to join a silent bidding process and to beat other parties.
Visit the property to assess its potential market value before making your first offer. Start low to give yourself wiggle room to haggle.
No matter how bad you to be a retail real estate investor, do not cut corners and exercise due diligence. Your investment might fail if you rush into entering the industry unprepared and set you back a fortune.