AS YOU will appreciate, being able to sleep at night is one of the main goals of any commercial property investor.

Which is what many real estate investors refer to as staying below their “Insomnia Threshold.”

There can be several things that can cause you to lose sleep. One is over-indebtedness; and the others are doing a poor analysis of the market and of the property itself.

Let me share 6 tips on what to do…

1. Always have enough cash reserves to cover several months of loan payments in case you lose a tenant, or the tenant simply falls behind for some reason. smaller items like any machinery and maintenance bills, which can add up quickly.
2. Make sure you have an investment plan you’re happy with, and then stick to it. In a nutshell, set reasonable goals and go after them. More objectives have been lost due to lack of planning than due to the failure of the strategy itself.
3. Buy yourself a financial calculator or get access to some great software. And learn how to use it to generate a realistic projected cash flow, after taxes.
4. Definitely keep up with the various trends within the market. Be sure to monitor the news and legislation affecting the property; take courses; expect workshops; and read books on business property. Knowledge will reduce your risks and improve your profits.
5. Identify and hire a team of top-level professionals (real estate, legal, financial, construction, etc.). The money you pay these people will more than pay you back, because of the deals they can help you put together.
6. Whenever possible, make sure your mortgages don’t require you to provide a personal guarantee. Always make an effort that they are non-recourse mortgages.

And 6 traps you might want to AVOID…

1. Don’t be swayed into committing a large proportion of your capital to risky opportunities. They can look fascinating on the way in, however they are often distressing on the way out.
2. Never make transactions with a handshake; at all times put them in writing, for your own protection.
3. Stay away from entering joint ventures without taking detailed advice from your advisers.
4. In no way commit money from the sale of one property to invest in another, UNTIL the initial liquidation occurs. Too many “certain deals” have the strange practice of falling apart.
5. Stay away from loans with variable payments. You will discover too many elements outside of your control, such as a sudden increase in interest levels. However, opt for a fixed rate loan. Although at worst, you have a 50/50 split between a fixed and variable rate mortgage.
6. Avoid properties that may have substantial negative cash flows (where your expenses greatly exceed your property income). But you can leave yourself somewhat exposed, just as stock traders found out, with their margin calls. Just settle for neutral gear; and then maximize your depreciation benefits.