Buying Existing Value In Commercial Property
Does considering buying commercial property fill you with doubt? Are you unable to assess if a deal is good or not?
If you are feeling anxious about your investments, read this article to understand how to fully optimize a deal and secure a safe income.
In commercial property, we need to make sure that we de-risk every deal in order to secure a safe long-term income. It can be achieved through buying value day one, which enables us to deleverage the property and ensure cash flow for the foreseeable future.
One of the biggest names in the property sector - Warren Buffet, explains the process in a very comprehensible way, saying that patience is everything and that there shouldn't be any rush but rather - we should wait until the price is right.
Some influencing factors are also related to the current situation in the market, referred to as the ABC's of fear:
- Amazon - with the company constantly expanding we need to invest in chains with a product that the public has a demand for and it could not be bought on the online platform.
- Brexit - the uncertainty of the UK market also needs to be taken into consideration when discussing a deal.
- Corrections - as everyone is aware, there would be another correction in the future that the results of cannot be predicted.
All these factors can have a certain impact on our businesses which is why we need to make sure our future cash flow is safe and long-term.
A certain type of a deal referred to as a B.I.M.B.O. (Buy-in management buy-out), is a great way to buy value day one. It's all about creating relationships, in order to not only broaden your network in the market but to also decrease the sticker price on a particular property. It requires identifying what the buyer's motivation to selling the asset is and providing a creative solution to their problem. Meeting with the vendor should definitely be a priority when securing a deal, in order to establish that connection, buy existing income and add value to it.