When you buy a house, or even a banana, you are supposed to do this: due diligence. How “diligent” you are lowers your risk in the purchase, and determining what is “due” forms the list of questions that need to be answered. In the case of a banana, your due diligence is simple – if fruit flies are circling, you’ll pass. For a real estate investment, conducting thorough due diligence using trusted experts is a must. Even then, there are always things that can be missed. But, the large items – the roof, HVAC systems, etc. – should be looked at carefully.
Buyers of real estate are empowered by the internet’s ability to view properties in great detail, and this has enhanced if not replaced the real estate agent for the purpose of finding properties to consider, especially in the current social-distancing environment. They often call the listing agent directly to ask questions and schedule showings, which is their right. But, it is a mistake to assume a buyer’s best interests are equally well served by the listing agent whose loyalty is exclusive to the seller.
The value of commercial real estate is driven by numbers. There’s little or no emotion in it.
The closest thing to an emotional buyer would be an owner/user who becomes attached to a property as a homeowner would. Other than that, value is driven by rents, and of course location.
Many people start their real estate investing with multi-family properties, which makes perfect sense on many levels. An important consideration when buying is how your investment will be managed. Will you do it yourself to save money, or hire a professional to collect rents and field maintenance and complaint calls 24/7?
What separates residential property value from commercial is the economic performance. Residential has none, and commercial has nothing but. As investments, residential property is pretty lousy – no offense to readers who are homeowners – I am one too. But, look at your home purchase and its ROI (return on investment) after 10 years.