Query - Investment opportunities and Risk management strategies in the real estate sector.

March 21, 2024

Response:

Shams Merchant is one of the leading commercial real estate attorneys in Texas, having completed over $2.7 billion of commercial real estate transactions across the country. Shams represents the largest commercial real estate developer in the country and many of the nation’s leading real estate investment and development firms. The real estate projects Shams has represented clients on have been featured in the Urban Land Institute, The Business Journals, and various leading industry publications. As an advisor to the largest real estate players in the country, Shams helps his clients manage risk across their diverse portfolios. The following are a few ways Shams and his clients manage risk and maximize returns in this dynamic real estate market:

1.  Leveraging Data

Data is king in commercial real estate. Because of the fragmented nature of the information available for commercial properties, those who have access to the most accurate data are the ones who dominate. Data can be obtained in many different ways. Your local broker generally will have access to data in their market and asset type. Brokers and their teams actively canvas the market, and obtain information from owners, buyers and sellers of real estate, including economics of recent transaction, available properties for sale and recently bought or sold property. By leveraging this data, investors and developers can determine which areas of the market are growing or contracting and make better investment decisions.

2. Watch the Competition

As the famous saying goes “keep your friends close but your enemies closer.” This couldn’t be more true in a cutthroat industry like commercial real estate. One way to determine and locate up-and-coming areas is to watch where the competition is going. A strategy many real estate investors deploy is closely monitoring where national players, such as Chick-Fil-A, decide to plant their flags. Nationals players such as Chick-Fil-A have the best real estate departments in the business and have completed a tremendous amount of analysis before entering into a particular market. Watching where these national players are headed is a great way to reduce the risk of investing in a market that will not perform well in the future.

3. Invest in a Great Team of Advisors

A great team of outside advisors is crucial to reducing risk in real estate. Outside advisors such as attorneys can help investors navigate nuanced and complex land use, zoning codes and deed restrictions to ensure they are able to execute on their business plans for the property and to reduce the risk of legal liability after purchasing a property. Other advisors such as environmental and tax consultants are also essential to de-risk an investment as much as possible. Without a solid team of outside advisors, investing in real estate can be an extremely risky endeavor. What’s more is that one lawsuit or misstep with an environmental issue or tax compliance can derail what would have been an otherwise profitable real estate investment.

4. Effective Property Management

One of the most overlooked aspects of maximizing returns in real estate investment is effective property management. Effective property management can reduce operating costs, tenant turnover, and even legal liability for a real estate project. By actively maintaining the project with exceptional property management, real estate investors can reap the benefits of saving money on costly repairs. Furthermore, good property management is one of the biggest factors for tenants to stay at a project versus go somewhere else. Reducing tenant turnover can significantly increase the net operating income for the property and maximize the returns generated by the investment.

Based in Fort Worth, Texas, Shams Merchant is a real estate attorney who represents the most active and innovative real estate investors across the country in the purchase, sale, development, leasing and financing of commercial real estate including shopping centers, office buildings, warehouses, apartment buildings and mixed-use projects. He is an associate attorney at Jackson Walker LLP, the largest law firm in the state of Texas. He can be reached via email at shams@cre.law or by visiting his personal website, www.cre.law.

Best regards,

 

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