Investing in commercial real estate gives you the opportunity to maintain a stable cash flow, especially if you rent out prime property. Making the right investment decisions can be monetarily rewarding, but you must locate the right property and refine your strategy before your efforts start to provide a solid return.
1. Carefully scrutinize the location—Just as with residential real estate, location is everything. Investigate properties in prime commercial areas, even if they are dilapidated and need some major work.
2. Maintain patience—It can take quite a while to purchase, fix up, and sell commercial properties. Maintain your patience and perseverance throughout every phase.
3. Build your network—In many cases, commercial properties get sold without being listed on the market first. Expand your network of private lenders and partners to improve your chances of scoring good deals.
4. Explore different property types—Many commercial investors start with apartment buildings, but there are many other property types, like land and mobile home parks, that can help you broaden your portfolio.
5. Understand the metrics—Familiarize yourself with common key metrics used to evaluate commercial properties, like Net Operating Income, Cap Rate, and Cash on Cash.
6. Consider the surrounding neighborhood—Search out vacancies, talk about real estate with others in the commercial real estate industry, and go to open houses to scout up-and-coming neighborhoods for profitable potential investment opportunities in the commercial realm.
7. Master your niche—If you are just starting out with commercial real estate investing, do not spread yourself too thin. Start by investing in one type of property, perfect your approach, and then move onto your next venture.
8. Work with the right law firm—Avoid closing delays and other transactional issues when investing in commercial real estate by partnering with the right law firm. Our team will work diligently on every deal you present to streamline the process and support your success as an investor.