3 Tips for the Novice Commercial Real Estate Investor

Commercial Real Estate Investor

Investing in commercial real estate involves using knowledge and experience, combined with calculated risks to turn a profit. Be sure to conduct research on all opportunities that present themselves.

Commercial Real Estate has a simple formula to follow which is very effective; learn to sell, so you can get listings and make deals. Investing in real estate is the act of taking a series of calculated risks. Real estate offers annual income, depreciation to shelter some of that income, and long-term capital gains.

Having the right viewpoint, not to mention lots of patience, are necessary qualities for investing in commercial real estate heading into 2013. Risking money always requires motivation which is needed for endless researching, developing the right relationships, and recognizing the right type of investment. Investment properties typically take longer to buy, fix up, and get sold which is why patience is valuable so as not to jump into a bad decision.

1. Assess Your Potential Investment

A great way to assess a commercial property listing is to study the area it’s located in by visiting neighboring businesses, talking to owners, and looking for unusual vacancies. Become familiar with what the professionals know by investing in properties that offer potential, remembering that income on commercial real estate is directly related to its usable square footage. Commercial investments, in comparison to residential investing, can easily yield the investor bigger returns.

2. Secure Financing for Your Investment

Commercial loans are different than residential or personal loans and in some ways more beneficial to the borrower. The down payments that are needed are usually a higher percentage, often as high as 30 percent, over loans on individual homes, meaning more out-of-pocket cash will be required. Before beginning the buying process, find out who the best lenders are in your area, as this could be the difference between getting qualifying for a loan or not.

3. Network to Become & Remain Successful

At the heart of taking action is basic communication. It’s about building rapport with commercial property owners so they feel comfortable talking about sales and doing business with you. Relationships with other investors and private lenders are also important when buying properties costing millions of dollars, and because these listings are probably not within the financial capabilities of most of us, the best option would be to work with a partner. Also, keep in mind that many office properties are sold without ever being listed, so by having more people in your network, you can locate more opportunities and market your real estate owned to a larger audience.

Following these strategies does not guarantee instant success; however, you should have more insight needed to start buying and investing in commercial real estate. There are tons of great resources available online, so be sure to do plenty of research before diving in head first. Good luck!

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