What Is the “Dollarization” Method?
The term “dollarization method” is used to describe several types of financial processes that benefit the stability of a country or business. When this method is applied to commercial real estate or CRE purchases, the investor can benefit from a higher ROI.
The Problem: Overpaying for CRE
It’s an unfortunate reality that the majority of novice investors in commercial real estate property end up overpaying for that property. This is typically due to the following factors:
The market phase at the time of purchase can affect the amount paid for a property. For example, investing in CRE during the hyper-supply phase when deals on real estate are scarce most definitely can result in overpaying.
Not Understanding the Market or Demographics
When buying CRE, it’s vital to understand the metrics and demographics at play; focusing on whether or not a property is in your market is simply not enough. A thorough analysis of the laws and population and job growth of the area in which CRE is located is much more likely to result in a sound investment.
Not Being a Niche Master
Many CRE investors have prior real estate investment experience. However, it’s absolutely critical not only to become familiar with the niche in which you’re investing but to master that niche. Not doing so will cause you to overpay.
Letting the Heart Rule
Falling in love with a property without considering the numbers can also result in overpaying. The best CRE deals are had by basing the feasibility of the investment on the numbers.
How the Right Real Estate Broker Can Benefit Your CRE Investment
In overpaying on a commercial property, you not only lose money but value. Lost value has an immediate negative effect on the health of your business. When you choose the right real estate broker, you can get a sound deal and preserve the long-term value of your investment.
The right broker knows it takes far more to get a sound and valuable deal than possessing deal savvy. An experienced company will:
- Take the time to understand the motivations of all involved decision-makers and their current situations.
- Take the value of the deal into account.
- Ensure that every property offers investors a deal that is in line with their business goals and objectives.
- Finalize no agreements unless they contain flexible options.
TB-RE’s Dollarization calculator allows us to get the most beneficial deals for our clients via the generation of comparative analysis. The results of the analysis provide our clients with leverage. Applying our lengthy CRE experience and deal savvy results in properties offering the best possible ROI without overpaying.
When it comes to sound CRE investment, there is simply no substitute for an experienced broker who can add value and protect your interests. TB-RE possesses over 20 years of experience and specializes in owner representation. Look through our website or call (312) 473-1764 today.