Investing in commercial real estate can be a wise idea. It can be a great way generate a postive cash flow from rent or leasing agreements. Commercial real estate is a safer investment than others because both the land and the building that it is on it have a value that will most likely remain steady.
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- Patience pays off.
It may take some time for your commercial real estate deal to go through. Buying commercial property is a lot different from buying any kind of residential real estate and the deals work on a different time scale. Do not fret if buying a building seems to be taking a lot longer than it took to buy or sell your house. - Try to work out your financing in advance. Real estate development funding and securing loans for a commercial property is different than taking out a mortgage on a home. In the first place, you will most likely need to put up a much higher percentage for a commercial building than a home. The other big difference is that if your investment does not work out, you may not have any personal liability. li>
- Focus on building your relationships.
Work on getting to know the players in your area. Talk to real estate investing companies, commercial real estate investment firms and others. You will most likely need to have partners to buy the property you want so getting to know these other companies and people can really help. Building your relationships to start new partners can be one of the best ways to make your commercial real estate investment successful. - Be flexible when picking your property. When you decide what kind of buiding you want to manage and look around do not stay locked into one kind of property. You may want to be a little flexible until you see what is available in the area you are looking to buy. There are benefits and drawbacks to owning any kind of space. Residential buidings are different to manage than commercial buildings. Maybe you wnat to manage an office building but not have to deal with residential tenants. There are also different kind of residential properties to consider. If there are any in your area, check out mobile home parks. Being open minded about your options can really pay off.
- Remember that bigger buildings are not harder to manage than smaller ones. If you manage an apartment building with 20 units, that will not be more challenging to manage than one with only five or 10 but will bring in a lot more revenue. Any decent commercial real estate developer will tell you that it is just as easy to get financing for a bigger building as it is to get it for a smaller one so it may be a better deal to go with the bigger building.
- You need to learn commercial real estate formulas. The formulas for buying commerical real estate are very different than what they are for buying homes. Any commerical real estate developer will tell you how important it is for you to learn all the pertinant formulas when looking at properties and getting your financing.
- Do your due diligence. Once you have settled on a property, you need to spend some money. Get it appraised, inspected and follow all the requirements legally mandated for the kind of property. This is not the time to scrimp. You need this to all be done by real professionals. It will save you time, stress and money later. If your people who do these things for you do a bad job, you will regret it later.
- Have experts you can rely on. No one is born knowing everything about commercial real estate. Find people you can talk to for advice. Maybe you know a real estate developer who would be willing to teach you the terminology or show you the ropes. Getting this kind of advice before you sign a deal or even start to look for a property can make a big difference.
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Successful investing in commercial real estate is not only for a big real estate developer. Follow these steps and you can succeed in this area.