7 Things to Look for When Purchasing Commercial Real Estate

If you are just getting into commercial real estate investing, then it can be a big change for you from other types of investing. It helps to learn a little about the industry and details of commercial properties that will affect your investment practices. By being prepared before you get started, you have a better chance at success. Here are seven things to keep in mind.

  1. Don’t Just Look at Apartments

It may be tempting to just look at apartments when you are starting out. While apartments are a great investment and can be an amazing way to turn a profit, they aren’t your only option. Don’t limit yourself. Consider all different types of commercial real estate. You can also make good money by investing in offices, industrial complexes or mobile homes.

  1. Rely on Relationships

In this area of real estate, you really have to build relationships. You need good relationships to help you find investing partners. You should also build relationships with real estate professionals to help you get leads on properties that may not be advertised.

  1. Understand It Takes Time

One thing that many new investors don’t realize is that commercial investing takes more time than your standard residential deal. There are larger amounts of money at work, regulations are different and each property has unique attributes that can slow things down. Just the screening process alone can take much longer, which means it opens more opportunities up that take time to look at and consider.

  1. Look for Multiple Units

You will increase your investment return if you consider properties with multiple units. The more units, the more income potential. In addition, the more units you buy, the less you spend per unit when you figure out the costs. Plus, you won’t be spending any more on management or other overhead, except maybe renovations. So, you are getting a lot more for your money.

  1. Know the Value Formulas Are Different Than Other Investments

When you buy residential properties, you probably have formulas set up to help figure your returns. This is going to be different with commercial properties. They operate differently and the market is different. So, be aware that you will need to make adjustments in order to figure out the value of a property.

  1. Don’t Set Too Short of a Timeline

Shopping for commercial properties can be much different than shopping for other properties. It can take a longer time. You may have to deal with more complex situations and go through longer processes to finalize the sale, so be sure you give yourself an adequate timeline.

  1. Find Financing First

To help make things go a lot smoother, you should always secure your financing before you even begin looking. This will help in many ways, starting with letting you know what you can afford.