Here are 10 helpful commercial real estate investment tips:
#1—Think Big—It is no harder to manage a large property than it is a small one. There are plenty of options available that will allow you to leverage your investment.
#2—Take Your Time—Commercial deals take longer than residential deals. It takes more time to purchase, renovate, lease and sell.
#3—Don’t Choose a Property by Default— People are more familiar with residential and it is natural for them to look at apartments when considering a commercial real estate investment. Don’t overlook opportunities in office, retail and industrial even if it does take you out of your comfort zone.
#4—Be Prepared to Spend a Lot of Time at First—There is a learning curve when you begin looking for commercial properties. The process of screening deals and making offered is slow at first but will go faster over time.
#5—Learn New Formulas –Obtain an understanding of Net Operating Income and CAP Rates and learn what is considered good for your area prior to making offers.
#6—Relationships Are Important—Because Commercial real estate investments can easily exceed a million dollars establishing relationships with lenders and other investors is very important.
#7—Find Good Financing in Advance—Commercial loans are more difficult than residential loans to obtain. It is best to interview lenders prior to making an offer as it will make it easier to qualify for a loan when you are ready.
#8—Be Prepared to Lose Due Diligence Money—After your offer is accepted you will need to have property inspections, tests and appraisal to determine if you are making a good investment. These can be quite costly, but if the property isn’t what was represented to you it is better to rescind your offer than to buy a bad property.
#9—Partners Are a Path to Wealth—Because commercial real estate deals are million dollar investments having partners helps when qualifying for loans. Also, you can spread your risk by investing in several commercial properties rather than just one.
#10—Know Where to Get Tough Questions Answered—It is imperative that you associate yourself with and experienced commercial real estate professional.
CEO, Employing Broker
Katchen Company, founded in 1962, is an integrated real estate company with its corporate headquarters in Lakewood, Colorado. The company offers real estate development, redevelopment, property management, brokerage, consulting services, construction oversight and maintenance services to individual and institutional real estate investors throughout the greater Denver metropolitan area in Denver with satellite offices in Chicago, Las Vegas and Miami market areas.