Recognizing a Commercial Real Estate Investment Opportunity

Atlanta has lots of great commercial real estate investment opportunities right now. Here at EpiCity we are very excited about the current economic climate and the impressive potential we are seeing in commercial real estate assets. When banks are not paying much interest on cash and the stock market is becoming more volatile, other investments, specifically commercial real estate, look attractive.

Investing in commercial real estate is a great way to diversify your portfolio. Whether you are an institutional investor or an individual investor, EpiCity can help you determine the commercial real estate investment that is right for you. Here are some tips to helping you recognize the right opportunity for your portfolio.

1. Determine the Right Type of Investment

Are you looking for an asset with strong cash flow to hold or an opportunity to buy and sell for a profit? Like any investment there are riskier opportunities and safer opportunities. A solid commercial asset will yield steady returns but they are much more difficult to purchase at a discount for high sale yields. On the other hand, an asset that doesn’t have steady cash flow can be purchased at a discount and yield higher returns when sold. In both situations it is a big advantage to invest and work with a real estate management company like EpiCity. EpiCity will manage a property and attain its full potential through leasing, sales, and renovations.

Expected returns are split into three categories.

1. Basic Returns – Typically we see 5-7% cash on cash returns with strong asset value preservation potential. These are your safer investments. These commercial assets boast higher occupancy rates with credit rated tenants who still have longer terms on their leases.

2. Modest Returns – These investments target 7-12% cash on cash returns with better asset appreciation. Typically an investment that is targeting modest returns may have lower credit tenants, higher vacancy rates, and more area for improvement.

3. Aggressive Returns – Assets targeting aggressive returns shoot for an internal rate of return higher than 12%. These are the riskier investments. Examples include vacant properties and land development projects.

2. Think Present and Future

We do not have a secret crystal ball that tells us the future of commercial real estate prices in Atlanta. However, we do have four generations of local, hands-on experience in the Atlanta real estate market and a great team of forward thinking individuals. When you are looking at an asset, its current numbers cannot be your only consideration. Think about what the asset can be in the future. What can be improved concerning the space? What kinds of tenants would be great additions to the asset? How will the area around the asset be affected? And that leads us to our last tip.

3. Consider the Asset’s Geography

Geographic areas improve and decline over time. Nobody knows for sure what will happen in an area but there are a lot of clues to help if you know where to look. Our 80 plus years of experience investing in Atlanta has given us unique perspectives. For example, we like to look for community improvement projects, access to transportation, and other types of businesses in the area. For more information on choosing a location for investing please see our earlier article.

All these reasons and more are why we are currently investing in “Intown” Atlanta. We have under agreement an exciting piece of commercial real estate on the little knoll near Armour/Ottley where Buckhead meets Midtown, which we affectionately call Armour Junction. Here we are creating a culture of businesses that support a healthy and sustainable lifestyle. We believe the future of office space is centered around community, health, and sustainability. If you and your business would like to be a part of Armour Junction, or one of the several other office communities we foster please contact us. For more information on investing in Atlanta commercial real estate, please contact us and visit http://www.epicity.com/investors-overview for more information.