9 Things to Consider When Looking at Commercial Real Estate

Many real estate investors start small and work their way up. That is just one way to go about getting in to commercial real estate. Whether you are just jumping in and going for the big time or advancing to larger properties, you should check out these tips to help you reach success in the commercial world.

  1. Think Large Scale

If you are considering buying an apartment with five units and need financing, why not just go for one with 10 units? Either way, you will need to get some type of commercial financing to get the deal done. It is important to note that if you buy more units, they will likely be cheaper.

  1. Apartments Aren’t the Only Option

When people think commercial real estate, they typically think of apartments. Residential apartments are great to invest in. However, many investors overlook other types of property that are out of their comfort zone such as mobile home parks and office buildings. Consider your goals and don’t be afraid to try a new type of property.

  1. Don’t Rush

Typically, commercial real estate deals take longer to complete. The entire process can be time consuming, from purchasing to renovation to selling. This is not a bad thing, so do not get impatient. If you rush, you risk making a poor decision.

  1. Get to Know the Formulas 

If you only have experience with purchasing houses, you likely use specific formulas that work. Commercial property is a different thing, so the formulas involved will be different. Take some time to learn new formulas and what works in your area.

  1. Find Financing Ahead of Time 

Loans for commercial properties are quite different than those for residential properties. The down payments are usually higher with commercial, but there is commonly no personal liability. In any case, it is essential that you find good financing ahead of time and ask around to find the best lenders.

  1. It Takes Time

If you have not completed your first commercial real estate deal yet, don’t get discouraged. Follow the learning curve if you are new to commercial properties and remember that with time, it will get quicker and easier.

  1. Relationships Matter 

While relationships with lenders and investors are important when buying residential, they are even more important in terms of commercial. These relationships come in handy when you’re talking about properties that are possibly one million dollars or more. In addition, it is common for commercial properties to be sold without being listed, so knowing more people is better.

  1. Know Where to Get Answers 

If you are new to commercial properties, it is a good idea to connect with experienced investors who have the right answers. If there is ever something you don’t understand, your go-to person should be able to answer your questions.

  1. Find Partners

It can be difficult to purchase highly expensive properties on your own, so it is a good idea to find partners to help you with your deals. If you don’t have the proper cash or credit, a partner can help.

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