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3 ways a commercial real estate investment can go wrong

On Behalf of | Aug 23, 2021 | Real Estate

Investing in commercial real estate can be highly lucrative. Yet, if things do not work out as you hoped, it can be a surefire way to burn through millions of dollars.

The key to ensuring your investments are profitable lies in the groundwork. While there is never a guarantee of success, many people lose money because they did not do the necessary checks.

Do not rush into a commercial real estate purchase

Here are some of the problems that could occur if you rush the buying process:

  1. Land use issues:  Your plan to set up Hawaii’s version of Las Vegas might have potential. Yet, if the zoning laws prevent bars and casinos, it is a non-starter.
  2. Title issues: There are people out there who will be happy to take your money for real estate that is not theirs. Ensuring the property has a clean title is crucial. If there is a lien on the property or an inheritance dispute, it may be better to find somewhere else or wait until the owner can offer you a clean title.
  3. Future developments: You buy land to turn into a peaceful yoga retreat. Yet, because you did not do the research, you failed to realize the state has plans for a new five-lane highway that will destroy the tranquility. If the road is scheduled to cross the land you buy, you might face a compulsory purchase under eminent domain law and struggle to recover your investment.

If you face problems after buying commercial real estate, there are legal courses you can take to resolve them. However, carrying out adequate due diligence before you agree to buy can save you the bother.