Commercial real estate investing in Jamaica is one of the money-making workhorse that drives the Jamaican economy.
Whether at a small or large scale, it is an activity that requires careful planning and consideration.
Here are some things to think about before you dive into the Jamaican commercial real estate market.
1. Plan your exit strategy early on.
This may be phrased as “sell before you buy”, because that’s what you’re really doing: selling to someone else down the line, once you’ve found a good property to purchase and put some sweat into it.
Plan out ahead of time how much money you would like to make from your investment.
And don’t forget about factor in how long it’ll take to clean and repair before putting it up for sale.
2. Make sure there’s a demand for that property
You may find the most amazing property on the island, but if you can’t sell it to someone else for a profit because there’s no demand for that kind of thing in the area, then it’s just going to sit there and collect dust while you wait forever.
You need to know where you’re buying and what people will pay for it.
Don’t get caught up looking at all of these properties that seem like such great deals without considering whether it’ll be worth anything in an actual Jamaican buyer’s market.
If your business is set up well enough, maybe you won’t have to worry about this too much, but if you’re buying at random and hoping for the best, you’ll probably come out on the losing end.
3. Only invest in what you know, and only put in as much money as you can afford to lose
It’s bad enough that we don’t all own a magic crystal ball that will tell us exactly when and where to buy property.
We also lack clairvoyant powers to determine how healthy the Jamaican real estate market is going to be next year or 10 years from now.
If your entire livelihood is based solely on real estate investing, then so be it.
But if not, do yourself a favor and diversify your income sources so you have some safety nets in place just in case this industry takes a dive.
4. Once you have a secure investment, only withdraw the amount needed to cover your expenses.
This is a similar point to #3, but it deserves its own mention.
While real estate investing in Jamaica can be highly profitable in some cases, it’s also not uncommon to see many investors get wiped out due to incurring too much debt for properties that never even turned a single penny.
Save up enough money from your bank account so you aren’t withdrawing from your investments along with whatever else you need in order to survive day-to-day.
5. Know what all of the costs are going to be beforehand
When shopping around for Jamaican properties to invest in, make sure you do some digging and find out exactly how much the owner is asking for it.
You also need to know what kind of down payment you’ll be expected to make (if any), and exactly how much money will be needed in order to get it up and running like you want.
It’s also good practice to sit down with a real estate agent yourself so you can prevent any confusion later on when signing contracts.
6. If all else fails, have faith that time will fix the problem.
Real estate investing isn’t easy.
But if you can endure through the tough times, then there are ample opportunities ahead to earn back your losses plus turn a nice profit while others are still struggling along trying to stay afloat.
If possible, buy into a Jamaican neighborhood that’s already doing well and has a bright future.
But don’t be afraid to take a risk on up-and-coming areas, because they could lead you to the pot of gold you’ve been searching for.
7. You need to know what your bottom line is before making any investment
Knowing ahead of time exactly how much money you’re willing to lose if something goes wrong will ensure that you won’t spend too long outliving your funds and digging yourself into even more debt than you were expecting.
This also means that if it looks like your current property isn’t going to be as profitable as it should be, then walk away from the deal rather than keep sinking money into something that might never pay itself off.
8. If you find a good opportunity, then try to use as much outside help as possible.
If one of your friends is an expert in the real estate industry in Jamaica and has been doing their own real estate investing for years now, it might be a great idea to ask them if they can give you some tips and maybe even come along and handle the practical aspects of the investment themselves.
You may also want to consider hiring someone like a property manager to take care of day-to-day tasks such as rent collection, tenant issues.
So that you don’t have to deal with those headaches yourself, because let’s face it, if your job doesn’t allow for much free time during the day, then you definitely don’t want to waste your nights and weekends dealing with tenant problems.
9. Make sure you’ve got enough liquidity in the bank beforehand.
One of the most important factors in becoming a successful real estate investor is making sure that you have ample money coming in so that all of your bills get paid on time every month.
Even if there are some unexpected costs or expenses.
If you don’t have this squared away yet, then it might be best to work on building up your current career before moving into something new like real estate investing.
10. Canvas several potential tenants beforehand when looking at buying an apartment building or multifamily property
Another mistake that many investors make is simply not checking out their potential tenants ahead of time and blindly assuming that they’ll be okay with renting from them without a problem.
Always make sure you’ve talked to at least 3-5 different people who live in the area, and that you’re getting their opinion on whether or not your property would be worth buying before putting your money down.
11. Don’t spend too much time trying to get into the real high-end Jamaican properties right away when just starting out
If you want to turn this into a profitable venture, then there’s no shame in sticking with small apartment buildings and single family homes at first so you can avoid dealing with any potentially huge issues due to depreciation.
Take it slow and easy, and do what is best to ensure your success.
12. Keep in mind that just because there’s a property for sale doesn’t mean it should be bought
Many Jamaican real estate investors make the mistake of getting caught up in a bidding war and going way over what an item is actually worth because they want to get a good investment at any cost.
Always do your research ahead of time and know exactly what you’re getting into before you sign on the dotted line.
Otherwise, you might find yourself stuck with something you can’t afford.
Which will leave you scrambling around trying to get out from under the deal somehow.
In other words, don’t always trust titles or what buyers’ agents are saying unless there’s documented proof beyond a reasonable doubt.
You can call this tip a bonus, but make sure to check if the commercial property you’re about to buy have backed property taxes or not.
Even if the seller says they have paid up all property taxes, verify for yourself by calling the Tax Administration Of Jamaica.
The last thing you want after acquiring a commercial real estate in Jamaica is a tax problem.