Has the pandemic opened up new opportunities for rural commercial property?
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
The pandemic has opened up plenty of opportunities for people from all walks of life. Whether that’s remote work or a chance to move and reconnect with extended family members, people are taking life in a whole new direction. One of the big migrations of the pandemic is an exodus away from the cities and into suburban and rural areas.
That’s right: people are choosing the countryside as a way to reconnect, to unplug from a busier life, and to see what other opportunities to rest are around the corner. The pandemic hit some areas harder than others, but large cities suddenly had to pivot away from doing things as they always had in the past.
The consequences aren’t all doom and gloom, of course: people are learning what they need for their own happiness, and companies are also opening spaces in smaller areas to take advantage of this migration. Despite the worst of the pandemic, there are some silver linings to cherish.
Commercial real estate investors can look into commercial property for sale in places they didn’t think of before, such as more rural areas. They are some of the fastest-growing places as folks are beginning to look beyond the city for new opportunities.
What to Examine When Reviewing Commercial Property for Sale
Every area is different, and it’s essential to do your due diligence not just on the commercial properties offered but the commercial guidelines of the area you’re interested in. No two areas have the exact same zoning laws, and every community has the right to examine the businesses you wish to build within their town.
Here are a few more points to consider:
- Be sure that you get all permits necessary for running a business within the commercial space and all licenses required to update the property. No matter what the listing says, every commercial property for sale will have some updating required.
- Set aside money for repairs, major renovations, and minor upgrades to the properties you’re interested in purchasing. Don’t use all of your money on the purchase of the property.
- Don’t forget the cost of getting a professional team to make the renovations you desire for your potential property. Have you researched reputable companies in the area? Sometimes coming from out of town creates a higher potential for problems, so make sure that you have solid references for any professionals you work with in the future.
- Don’t hesitate to walk through the financials properly and ask for documentation at every step of the purchase process. If your research doesn’t make the property look promising, it’s perfectly reasonable to abandon the purchase.
These tips might not sound earth-shattering, but many investors tend to overlook them because they’ve found the "perfect" property. The truth is that every property is what you make it, but it’s far better to start with a great foundation than have to play catch up.
Are there incentives for buying rural commercial property?
Yes, there are incentives for buying rural commercial property. However, they do often come with their own restrictions, usually around how long you have to hold the property before selling it. Suppose you take local incentives to purchase and develop commercial property. In that case, it’s important to reach out to the local government for the full set of terms and conditions around those incentives.
New development in a rural community is news that travels quite quickly; be prepared to explain why you chose to invest in the area and what your long-term plans are for the property. Being transparent about your purchase in the area will go a long way towards getting key community support on your side.
Making Your New Property as Profitable as Possible
Once you find the property that you want, it’s time to look at increasing profitability as much as possible. As a real estate investor, there are multiple profit paths to consider. In the case of rural commercial property, you have the ability to find tenants or hold the property long enough to sell the improved space to another investor.
If you’re going to make the property as profitable as possible, consider getting tenants in the space that want to try out new business ideas. Sometimes all that’s needed in an area is someone to invest and believe in the potential of the town.
Connect with Local Entrepreneurs
The best way to pull this off with many smaller areas that are growing due to post-pandemic migration is to connect with local entrepreneurs that are looking for new spaces. Perhaps they have the money to operate a business, but they haven’t been able to find the right location. By coming in and purchasing a property to fix up, you’re solving their problem and your problem at the same time.
Indeed, a motivated entrepreneur looking to run a business may come to you with local improvement funds already in-hand, meaning that they have a small war chest to handle the rent for many months at a time.
Handling Tenants While Being Remote
If you’re thinking about renting out commercial property to another business, you might assume that you have to live in the town in order to handle the property management. This isn’t the case at all. There are plenty of out-of-town landlords that appoint local property management to check out the property and handle issues on their behalf.
Hiring a property management company might not make sense for every investor, but commercial real estate investors can still benefit from a trusted source to handle their properties. This certainly increases the passive nature of their investment portfolio vs. trying to handle everything directly.
Picking up rural property may sound risky, but the truth is that all investments carry a degree of risk by nature. But as we look at the population patterns, it makes sense to begin looking at other properties outside of the typical big city. Not only can the deals make more sense than their big-city counterparts, but you also have a chance to build up equity in properties that other investors often overlook.
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