As we round the bend into 2019, property investors and business owners involved in commercial real estate in Tulsa, Oklahoma City, and the surrounding region can add additional income streams by expanding their portfolio in the area of commercial real estate. Just as there are diversified options in just about every industry, commercial real estate offers a variety of types of investments—some require more attention than others, and some are riskier than others, yet all offer investors great possibilities for future financial security.
Embrace new investment opportunities
Whether you are a new investor or a seasoned one, there’s something refreshing about embracing new opportunities for the new year ahead. Here are some commercial real estate options to consider if you want to diversify your income streams in 2019.
1. Rental properties
Although investing in rental properties requires a good bit of time and attention, or the hiring of a property management company, the results can certainly be worthwhile. Here are some opportunities to consider when investing in rental properties.
- House hacking – The process involved in house hacking gets other people to pay your rent or mortgage while you free up your resources for other things. The typical process includes the buying of a duplex or fourplex, and living in one portion of the property while renting the others out. The great part about this is that you can still qualify for a residential loan for this type of investment. The qualifying standards and down payments are more reachable, making it a feasible place to get started in commercial real estate. Lenders look at duplexes and fourplexes the same way they look at single-family houses or condominiums. Low down-payment loans such as FHA loans offer attractive opportunities for new investors to get started.
- Investment properties – If you are prepared financially, and you prefer not to live in your investment property, buy a freestanding property. Make sure your expenses are projected to be lower than the rental rate you plan to charge, and set aside money for both small and large maintenance items such as carpet cleaning, repainting, heating and air conditioning upkeep, and roofing needs such as repairs or replacement.
- Property management – If you prefer not to be the person who finds new tenants, sets up the leasing agreements, keeps up with the operational needs of the property, and gets calls when there is a problem like pest infestation, unexpected flooding, or a backed-up toilet, then hire a property manager to take care of those things for you and free up your time to do what you enjoy.
As you know, it takes money to make money. Crowdfunding connects real estate developers with investors who want to finance projects. It presents a viable option to consider when investing in commercial real estate.
3. House flipping
Do you have an eye for great underpriced properties with potential? Are you willing to crunch numbers and calculate accurate estimates for repairs? If you enjoy finding, buying, and fixing up old properties—and reselling them for profit—house flipping is for you. Some investors choose to flip houses with a knowledgeable partner to minimize the risk and shorten the time between the purchase and sale of the investment property. It isn’t as glamorous as TV makes it, but house flipping can be financially rewarding and certainly worth the investment.
4. Real Estate Investment Trusts (REITS)
If you desire to participate in real estate, consider investing in a real estate investment trust (REIT) where you earn a share of the income produced through a real estate investment without the added work of buying and managing a physical property. REITS are companies that own or finance income-producing real estate in a range of property types. They have to meet a number of requirements to qualify as a REIT. They give investors and business owners a great opportunity to enjoy the rewards of investing without the hassles of buying and managing properties.
5. Renting Rooms
If you’d like to start out small, consider renting out a room in your existing home. People have tremendous opportunities right before them that they may not even see—such as the ability to build or convert the second floor of a free-standing garage into a studio apartment they can rent to others at the convenience of their own address! A finished room over the garage (FROG) studio apartment can bring in extra cash and gently launch you into real estate. There is an initial investment involved in finishing a room over your garage, but it can pay off nicely. People enjoy renting rooms in residential neighborhoods. They particularly enjoy studio apartments equipped with a kitchen, microwave, dishwasher, bed, and bathroom.
Before investing in commercial real estate, look carefully at the options and diverse opportunities from which to choose. Consider your long-term vision and which commercial real estate prospect will best fit your goals. Understand the market and the risks associated with the division of commercial real estate in which you plan to invest. And educate yourself on current trends in the market so you understand not only where things are, but also where they are going.
Anything worthwhile takes intentional effort—particularly upfront. If you are getting started in commercial real estate, consider this season as seedtime. Seedtime isn’t glamorous, and sometimes you can’t see tangible results for your effort. But there is no harvest without seedtime. The rewards of investing in commercial real estate are only in your future if you take the time to plant the seeds now and position yourself for a harvest.
Get insight into the market
See McGraw Commercial Properties’ services and call us to discuss your CRE needs. Get insight from an experienced team on the CRE market in Tulsa, Oklahoma, Texas, and Arkansas to set yourself up for success in 2019.