When it comes to commercial real estate, it's probably not a good to be into raw land speculation this early in the recovery/early growth cycle. The exception might be if you know where McDonalds has committed to building a new restaurant and there is raw land available in the vicinity. McDonalds is known for doing very thorough due diligence on both current customer potential and future grow for each specific location.
However, the Brownfield niche sector shows more promise. Especially in the urban environment. Brownfields are previously developed commercial real estate that is currently not in use or severely underused.
You may be under the misperception that all brownfields are too environmentally contaminated to be profitably redeveloped. Reality is you need to rethink this. There are many incentives to redeveloping brownfields.
Here are commercial property types you should consider:
The commercial real estate recovery is strongest in the apartment sector. Very specifically, urban apartment buildings within a short distance of entertainment and conveniences. The best places for you to look for brownfield opportunities are in areas already having these amenities and already prospering.
Alternatively, you should look for brownfield opportunities near apartment buildings that lack these conveniences and entertainment venues. That makes the brownfield a natural to be developed into a collection of the commercial properties the neighborhood wants. Everyone wins.
You need to become familiar with the benefits and advantages of redeveloping a brownfield into an urban destination. This is information you need to communicate to contractors, lenders, appraisers, local officials, and others that will be involved with the project.
Brownfields may or may not be your best investment choice. Often having much of the infrastructure in place is beneficial. Other times, the cost of environmental cleanup is prohibitive. As with all real estate investing, due diligence is paramount.
Please leave a comment if this article was helpful or if you have a question.
Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.