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Investing in industrial real estate: How to choose

When you're interested in adding industrial property to your investment portfolio, your main concern may be finding the right property to diversify your portfolio without losing income. You want a safe bet; The goal is to find a property with a source of steady income.

If you're purchasing real estate to rent to a prospective tenant, you need to know about the tenant him or herself first. Know the tenant's background and if the tenant is likely to take out a long lease. Many tenants who are already established in industry are likely to take out longer leases and less likely to default on payments, making them the ideal candidates for a safe return on your investment.

One thing you do need to remember is that, as a landlord, you'll need to cover some expenses if the property needs upgrades. Some of this may be negotiated into a lease, but over time, there's no question that you'll end up putting time and money back into the property. Finding the right property begins with knowing that the one you choose is on a solid foundation and has few, if any, defects that could lead to the need for costly repairs down the line.

When you're ready to make a purchase, remember to consider the pros and cons of working with industrial real estate over residential. If you plan to rent the property out, you must consider the location, size and potential for returns before you choose a property. The wrong property could end up costing you thousands in repairs or while waiting for a tenant.

Source: INC, "How to Purchase Commercial Real Estate," accessed May 11, 2018

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