The Great American Dream has always included real estate. Owning property, and then multiple properties by using leverage, seems to have become ingrained in the American DNA. Think of your old Monopoly game. It’s all about real estate, investments and location.
Your wise old Uncle George once told you that the secret of real estate success was location…location…location. It seemed simple enough and, for sure, all the successful real estate millionaires seemed to have their holdings in just the right places.
But then you began to hear of real estate failures. What went wrong? Didn’t these people know about “location…location…location?”
The answer is that real estate is a lot more complicated than just selecting the best location. Unprecedented credit availability, consumer over-extension, the sagging employment market and poor bank judgments combined to wreak havoc on the residential real estate market.
Given the current state of residential and commercial real estate, this seems like a good opportunity to address some of the key aspects of commercial real estate success.
The key to a successful commercial location very simply depends on what you want to do with it. Hotels, offices, restaurants, warehouses, manufacturing facilities, shopping malls and gas stations all have different criteria for the perfect location.
Let’s say that your piece of the American Dream includes opening your own restaurant. You know where the perfect location is in Your Town, USA, so you contact the owner or the broker for details. It is very possible that your next reaction will be heart palpitations over the price. You will find that everyone, especially the owner, will be aware that the location is perfect, and it will be offered for sale at the highest possible price.
This will be your first entry into the world of real estate trade-offs. Each trade-off can bring you closer or further away from your initial perfect location. Another location nearby to “perfect” might require re-zoning or it might also be priced beyond your budget. You might want to consider leasing in an existing plaza. This can work out well if the location is priced within your pro forma, has good street visibility for your building and/or your sign, good demographics for your restaurant, plenty of parking and good accessibility from the street.
All of these issues are resolvable. They just take time, patience, money and that trait of great American entrepreneurs – perseverance.
Invest in real estate as you pursue the American Dream. It can be a very, very lucrative. But remember, the devil is in the details, so study all the details to be certain the location that seems to be great will be great for you.