How To….Begin Investing In Commercial Real Estate by Sandra Manley
Apr 06, 2018 brooklyn,commercial real estate,investing in commercial real estate,investments,investors,real estate investment,red hook,reds hook brooklyn,sandra manley
For many people, investing in commercial real estate is an exciting venture and an effective way to make money. The potential rewards can be substantial. Although there is no one-size-fits-all formula for purchasing commercial real estate, if you’re a novice and you’re thinking about taking the plunge, here are a few tips to keep in mind.
Tip 1: Know WHY you want to own investment propertyDo you want a building to rent out, to build equity, house your own business, or something else entirely? Decide what type of building you want to own — multi-family, mixed use, industrial, etc.Tip 2: Know what is involved in maintaining investment real estateWill you be just an investor or will you be the OWNER of a property, with all that entails? Depending on the type of real estate, will you need a building manager? Will you run everything yourself? How will the property generate income? Who will be your tenants? Who pays for utilities, taxes, or on-going maintenance? If you’re new to investment real estate, do your homework early in the process.Speaking of homework, there are plenty of classes to take you through the basics of selecting, financing, and managing an investment property. Some real estate schools offer group tours so students can learn first-hand how to select the right building.Tip 3: Line up your professionalsLine up your professional network before shopping for properties. Depending on what type of property you purchase, you will likely need an accountant, real estate broker, real estate attorney, commercial lender, and/or contractor.This is also a good time to get your financing in order. If you plan to pay cash for a property, have your proof of funds ready. If you plan to finance the purchase, make sure to find financing in advance and have your down-payment accessible.Tip 4: Location is still #1Location, location, location may be cliche, but it’s still true. What kind of location do you want — established, up-and-coming, close to certain businesses or infrastructure? Also, check for any major changes that could occur in that area, e.g. new development, expanded public transit, or the opening of a trendy grocery store.Tip 5: Start pounding the pavementThis is the fun part! Go out into the areas you’re interested in and get to know them intimately. Go back at different times of day and night, weekdays and weekends. Check out the local restaurants and businesses, the parking situation. Map out property listings to get familiar with what’s actually for sale, and — finally — call your broker and start looking at potential properties!