Knowing how to buy commercial real estate opens your world up to incredible investment opportunities. Many people around the world, including Shark tank mogul Barbara Corcoran, attribute their high net worth to real estate investing. In Corcoran’s case, she grew her real estate agency into a multi-million-dollar empire, which began with $1,000 she secured with a loan.
Buying commercial real estate can be a tricky business. It involves a lot of research and negotiation and often requires professional advice from an expert consultant or attorney.
In this article, we’ll take a look at some of the things you need to know before you decide to buy commercial real estate in your area.
Reasons to Buy Commercial Real Estate
Before you learn how to buy commercial real estate, you should understand the benefits of doing so. This will help you find your motivation for buying, which can drive passion into your career.
There are many reasons why so many people choose to invest in commercial real estate:
- The potential for high returns. Commercial property values tend to appreciate more quickly than residential property values, which means you can make more money as an investor.
- The ability to diversify your investment portfolio. Investing in commercial real estate offers a way to diversify your investment portfolio with an asset that has different risks and rewards than stocks or bonds.
- An alternative source of income. Commercial real estate investments can offer income from rents, leases, and other sources such as tenant improvements, leasing commissions, and management fees from property management companies.
Buying commercial real estate is a great way to provide for your family, achieve personal financial freedom, retire early, and leave a legacy behind for your family.
How to Buy Commercial Real Estate
After you understand your motivation behind commercial real estate investing, you can learn how to buy! Here are a few steps you can take to purchase the right property and see the best return:
Choose a Market
The five main commercial real estate markets are office buildings, retail spaces, industrial properties, multifamily housing, and hospitality.
- Office buildings commonly have conference rooms, private spaces, and common areas so employees can interact with each other while they work on projects. There are small office buildings that can house one tenant or business, mid-sized buildings that can hold a few different tenants, and high-rise buildings that can host dozens of tenants at once.
- Retail spaces are one of the most common types of commercial real estate investments because they can be bought in many different sizes and price ranges, from small mom-and-pop shops to large shopping malls with multiple tenants and lots of foot traffic.
- Industrial properties include warehouses and manufacturing facilities.
- Hospitality buildings host restaurants, entertainment centers, hotels, and short-term rentals (like Airbnb).
Get Pre-Approved for Financing
If you want to buy commercial real estate, it’s important to have a lender who knows your credit profile and has approved your loan application before you begin looking at properties. The lender will run a credit check and verify your income and assets to make sure you can afford a loan payment that’s larger than what you currently pay on your home mortgage. This will also let you know what you can afford to buy.
Find a Team of Real Estate Professionals
Finding the right team of real estate professionals involves balancing three factors: expertise, experience, and trustworthiness. You need to find people who are knowledgeable about the industry and can advise you on how to make an investment that will pay off. You also need people who have been in your shoes before — they know what mistakes to avoid, what pitfalls to avoid, and how to get through them if they do happen. Finally, you need people who are trustworthy — if something goes wrong with your investment, you want someone on your side who will go above and beyond for you.
Search for Investment Opportunities
Once you know what kind of building you want to buy, you know what you can afford, and you have a great team of real estate professionals behind you, it’s time to shop around! Search through online listing portals, the classifieds section of the newspaper, Craigslist, and Facebook Marketplace, and talk directly to property sellers.
Although these are all great methods for finding available commercial properties, your best bet will be to utilize your brokerage. Commercial real estate brokers have access to listings and data that you might not be able to find on your own. Additionally, they will listen to your unique needs and find a property that perfectly aligns with what you’re looking for.
Speed Commercial Real Estate Consultants
Speed Commercial Real Estate is here to help first-time commercial real estate investors navigate the tricky industry. We can make our best recommendations for properties, help you secure financing, assist with negotiations to get you the best deal, and even help you manage the property after you buy!
Contact Speed Commercial Real Estate if you are interested in investing in commercial real estate in the metro Jackson, MS area. We will stand firmly by your side to provide critical support.