Real estate continues to be a wise long-term investment opportunity in Albany. It can provide investors with passive income while letting them leverage advantageous tax laws and mitigating investment risk through diversification.
With so many existing commercial structures available for acquisition and leasing, it can be tempting to jump at a chance to scoop up a dilapidated property that just needs a little TLC or renovation to boost its profitability. However, there may be significant risks just below the surface.
Due diligence can substantially reduce risk
If you find yourself in love with a property that you have big plans for, take a step back and consider what may not be readily obvious. Assuming that it’s a great location for your intended use of the property, there are a slew of other considerations you’ll want to take note of, including:
- The property’s current cash flow
- Any third party vendor contracts such as landscaping or building maintenance
- Co-tenancy clauses
- Common area maintenance reconciliations
- Zoning compliance certificate and any zoning approvals, current or pending
- Declaration of covenants, conditions, restrictions, reservations and easements for the property
- Current insurance policies and any pending claims
- Any pending litigation that could affect the sale of the property or future viability
- Copies of recent tax bills, including special assessments or incentives
This list is by no means comprehensive, so it’s often best to resist the urge of moving too fast in order to compete in the currently overheated real estate market. Having legal guidance with pre-acquisition due diligence can help you make a sound investment that will pay high returns for many years to come.