Commercial real estate may deliver the appreciation and stable returns most investors are looking for, even during economic uncertainty. The volume of capital invested in commercial real estate further demonstrates its proven worth as an asset. It also may offer investors a more diversified, balanced, and scalable approach to real estate investing. Whether you’re considering investing in an apartment complex, office space, light industrial, or a self-storage facility, here are a few tips to get you started in commercial real estate investing.
1. Establish Your Goals
When it comes to investing in commercial real estate, it’s important to establish your goals beforehand. Consider why you are investing in commercial real estate – are you looking to build long-term wealth or seeking a shorter-term return on your investment? Additionally, think about what kind of returns you are expecting and the level of risk you are willing to accept. These are all important questions to ask yourself before making a commitment to a commercial real estate investment. Taking the time to answer these questions will help you make an informed decision that is tailored to your financial goals.
2. Make a Plan
A successful long-term investment strategy requires careful planning. By mapping out your plan, you can ensure that you stick to your goals and don’t make decisions impulsively. This includes deciding what your buy box looks like – what types of assets you want to focus on and invest in. Knowing this ahead of time can help you stay focused on the right investments while also making sure you are not overextending yourself financially. Planning your strategy out in advance is key to creating a successful and sustainable investment portfolio.
3. Find Deals
When it comes to finding commercial real estate deals, relationships, and networking are key. Developing trust and credibility is essential to any successful real estate investment, so build strong relationships with brokers. You can start by following through on what you say you’re going to do and running your business professionally. Building a reputation with brokers as someone who does what they say and keeps their word will ensure you’re always at the top of the list when it comes to new deals. Take the time to nurture these relationships, and you’ll be sure to find the best deals for your commercial real estate investment.
4. Perform Due Diligence (or Find Someone Who Can Help)
Performing due diligence on a property requires a great deal of education, training, and professional opinions. It is important to remember that the investment may be portrayed in a positive light, but it is up to you to assess it with clear eyes and decide if the value is truly there. This can include research into local markets, investigating the area’s future development potential, understanding the building’s history, inspecting the property for structural integrity, and consulting with local experts for their opinion. Taking the time to perform due diligence is essential to ensuring that you are making a smart and informed investment decision. But what do you do if you find a deal where the due diligence is beyond your abilities? This is where networking is key. Partner with someone who is knowledgeable or brings in an expert to show you how it’s done.
What is next?
Finding the right financing for a commercial real estate deal is critical to making your project a success. In our next blog post, we will discuss different types of funding available to real estate investors and entrepreneurs, as well as provide insight on how to secure financing. With the right financial support, you can tie all the pieces of your deal together and take your project to the next level. Stay connected with us to learn more about the different types of commercial real estate funding available and how you can secure it for your own projects.
Investor Loan Source, a private money lending company, provides high-quality investment property loans to private real estate investors at the lowest costs possible. Our process for providing real estate investors with private lending is unique. We place emphasis on the hard asset and value of the collateral (property) and less on the borrower. Our asset-based real estate investment loan model means we can provide more money lending to more investors than is available from standard bank loan models. At Investor Loan Source, providing real estate investors hard money loans is our business; it’s all we do. We offer several business real estate loan products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.