Real estate has always been a great investment. And that’s never been truer than right now.
This is especially true of commercial real estate. After all, the economy is booming. And as new businesses spring up, they are needing office space. So if you’ve been wanting to learn how to get started in commercial real estate, you’ve come to the right place for answers.
In this article, we take a look at tips for getting started in commercial real estate and being successful at it. Keep reading for advice that will help take you to the next level in your real estate career.
1. Educate Yourself on Commercial Property Financing
Securing commercial real estate financing is no simple matter. After all, commercial real estate is expensive, so you’ll need to have access to plenty of cash.
You’ll need to familiarize yourself with interest rates, learn about amortization, triple net lease/retail financing, as well as a host of other important commercial financing concepts. Property development finance is available to first-time landlords for example, and you’ll need to know how to let development finance works as a result.
There will be a ton of forms to fill out, so be prepared for a lengthy and complicated process, and invest in some great commercial real estate software.
2. Develop Clear Goals
This is true of any business plan but is especially important when venturing into a commercial property. You need to have clearly-defined goals.
So, what are your short and long term goals? Do you want to invest in retail space? Do you plan to invest in rental property? These questions are extremely important because each of these entities are very different to deal with.
Other goals would be to decide how involved you want to be in managing your properties. Do you plan to be hands-on or to hire a property manager? We will talk about the value of a property manager in a moment.
3. Get Pre-Approved for Financing
Before you start the process of searching for a property you’d like to invest in, we recommend that you first complete the pre-approval process.
After all, you’ll need to know how much money you have to work with. This can save you a ton of time by limiting the properties you look at.
It will also help with your initial contact with property owners because they will take your interest more seriously and be more forthright when they know that you’ve already been pre-approved for financing.
4. Create a Realistic Budget
Regardless of how much financing you have to work with, it’s vital to sit down and determine your budget.
A smart investment knows better than to sink every dime available into their properties. In other words, never bet the farm. Trends change, the economy ebbs and flows, and the real estate market is in a constant state of flux. Real estate will always be a solid investment, you just need to be patient and smart in how you handle the funds that are available to you.
5. Educate Yourself on Current Trends
Believe it or not, trends have a huge impact on property value. For example, if you’re planning to invest in commercial retail space, you need to choose a location that is hot right now or that promises to be hot in the near future.
After all, not every location is created equal.
Big box retailers might be popular in one city, whereas strip malls might work better in other parts of the country. So resist the urge to lean on your own taste rather than paying close attention to what the market is asking for.
6. Be Patient
Investing in commercial real estate is a long game. This business can certainly be exciting, but we encourage you to resist reacting emotionally. After all, the economy fluctuates.
When faced with a dilemma, take a deep breath and relax. Try to remain clear-headed and logical. And if you have to walk away from a deal that seemed like a winner, for whatever reason, be willing to do so. This is a far wiser move than getting yourself involved in a situation that puts you too deeply at risk.
7. Limit Risk
Speaking of risk, proceed with caution. When a deal seems too good to be true, it probably is. Resist the impulse to overextend yourself. Remember to always play for the next game.
A good way to reduce risk is to surround yourself with trusted advisers. Ask them for honest feedback and be willing to take their advice very seriously.
8. Consider Investing as Part of an Investment Group
Another way to reduce risk is to join an investment group. This way you are not shouldering the entire financial burden. You will simply be one of many investors on a wide range of commercial property opportunities and thus share in both the risk and rewards.
9. Hire an Attorney
Never go into business without having an experienced business attorney on your side. This way you can proceed with confidence, knowing that your contracts are solid and that all legal matters have been carefully vetted.
Hiring a business lawyer might seem like a major expense, but it will likely save you a lot of money and headaches in the long run.
10. Consider Hiring a Property Manager
We also strongly encourage you to consider hiring a property manager. This is a person with expertise in commercial property you can count on to handle all aspects of managing the business so that you can focus on other matters, including the freedom to seek new investment opportunities.
Having an experienced property manager also provides another trusted advisor so that you can get great feedback regarding how best to proceed in all business matters.
Tips for How to Get Started in Commercial Real Estate
When it comes to learning how to get started in commercial real estate, it’s important to start with the basics. This is a robust business, with plenty of opportunity for everyone. But there’s a lot of money involved, so you need to learn the business and take it one step at a time.
Be sure to check out our website for more useful information on real estate software.
