The idea of investing in commercial real estate, while quite exciting, can be daunting. It can be difficult to determine whether or not it’s a good time to do so. Although deciding when it’s the right time to purchase a commercial real estate property is very personal, there are some factors that can be helpful to consider.
The State of the Economy
The state of the economy is an extremely important factor to take into consideration when determining when to purchase a commercial real estate property. The economy goes through its own cycle with various stages: recession, recovery, expansion, and contraction.
- Recession
Purchasing commercial real estate property during a recession can be beneficial because the number of commercial properties that are available on the market exceeds the demand for them. Because of this, prices are generally lower and selection is broader. However, securing financing during a recession can prove more difficult.
- Recovery
Purchasing commercial real estate during the recovery stage is generally still a good idea. The market begins to improve and prices still tend to remain lower during this time.
- Expansion
When the economy is in the expansion phase, demand generally outweighs supply. Because of this, it tends to be a seller’s market and therefore it’s less favorable to be a buyer and more favorable to be a seller, since property owners are able to demand more money.
- Contraction
The final stage in the cycle is the contraction face. During this period prices start dropping because the number of properties available for purchase starts to exceed the demand. Therefore, while financing may be more difficult to obtain during the contraction phase, it tends to be a buyer’s market.
Time of Year
While not a hard and fast rule, there are times of the year when there tend to be better deals on commercial real estate. The best months tend to be March through August and are also more convenient due to common weather patterns.
Personal Factors
It’s also helpful to consider several personal factors before purchasing commercial real estate. You should ask yourself questions such as how much money you have and how much money is available through your business. You will also want to consider if you can handle the additional increased overhead. And finally, you will want to truly consider whether you are merely settling for a property or if the property you plan to purchase is the right commercial property for you and your business.
PALUMBO LAW Helps Those in Rhode Island with their Real Estate Needs
The process of closing on a commercial real estate property can be really confusing and very detailed. This is why it’s so helpful to consult with a knowledgeable and experienced Rhode Island real estate attorney who knows the ins and outs of the closing process.
At PALUMBO LAW, our experienced Rhode Island Real Estate lawyers will walk our clients through the entire closing process. We have experience and proper contacts to ensure that you are paying an appropriate amount and are receiving a safe property as promised. To learn more or to schedule a free consultation, call us today!
