Tips For Commercial Real Estate Investment

Ask any real estate professional about the benefits of investing in commercial property, and you will likely be told that these properties are a better deal than residential real estate. Commercial property owners love the additional cash flow, the beneficial economies of scale, the open playing field, the abundant market for good, affordable property managers, and the chance for a bigger payoff from commercial real estate. How do you find the best properties? 

Image – free for commercial use

Learn What The Insiders Know

To get started in commercial real estate, learn to think like a professional. For example, understand that commercial property is valued differently than residential property. Income on commercial real estate is directly related to its usable square footage. This is not the case with individual homes. You will also see a bigger cash flow with commercial property. You will earn more income on multifamily dwellings, for example, than you would on a single-family home. Understand that commercial property leases are longer than on single-family residences. That paves the way for more cash flow. If you’re in a tighter credit environment, make sure you have cash in hand. Commercial property lenders like to see at least 30% down before they will give your loan the green light. 

Map Out A Plan Of Action

Setting parameters is a top priority in a commercial real estate deal. For example, ask yourself how much can you afford to pay and then shop around for mortgages to get a sense of much you will pay over the life of the mortgage. Using a tool like a mortgage calculator will help you to develop good estimates on the total cost of your home. 

Other important questions that you need to ask are how much you expect to make on the deal, who the key players are, how many tenants are already on board and paying rent, and how much rental space you need to fill. 

Learn To Recognise A Good Deal

The best real estate professionals know a good deal when they see one. The secret is to have an exit strategy. The best deals are the ones you know you can walk away from. It helps to have a sharp eye. Always be on the lookout for damage that needs to be repaired, know how to assess risk, and make sure to break out the calculator to make sure that the property meets your financial goals. 

Look For Motivated Sellers

Like any business, customers drive real estate. Your job is to find them. You need to find those who are ready and eager to sell below market value. The fact is that nothing happens or even matters in real estate until you find a deal, which is usually joined by a motivated seller. This is someone with a pressing reason to sell below market value. If your seller isn’t motivated, they won’t be as willing to negotiate. 

Discover The Fine Art Of Neighborhood Farming

A good way to evaluate a commercial property is to study the neighborhood it is located in by going to open houses, talking to other owners in the area, and looking for vacancies. 

Print Friendly, PDF & Email

Source link