Whether you are a real estate investor or need a commercial property for your business, purchasing commercial real estate is a big financial step. Purchasing commercial properties differs significantly from purchasing your home or pursuing residential property investments. Therefore, these are some tips to help you.
Define Your Investment Goals
Your first step is to detail why you want to purchase commercial property. You should also discuss what types of properties, e.g., apartment buildings or other multifamily properties, retail or office spaces, warehousing, or multipurpose properties, you are interested in investing in. If you are purchasing real estate for your personal business, you may look for areas that are zoned for manufacturing, warehousing, offices, etc. If you plan to lease out the space, you may search for properties that offer facilities for different types of tenants. For example, you may invest in buildings with office and retail space that have residential space above them. Be specific about your desired properties.
Then, look over your budget and determine how many properties you want to invest in and when. Be sure to make short- and long-term goals. For example, how many properties or how much rental income do you hope to make in one, three, five, and 10 years? Then, how will you pay for them?
You also need to secure your financing. Unless you have cash on hand to cover the purchase of your first commercial property, you will need to gain investment. Therefore, analyze your financing options, from traditional to alternative financing. Look for the best loan terms and determine whether you have the personal or business credit to qualify for a loan. You may also seek investors.
Build Your Team
Before you start searching for properties and pursuing financing, you should have a well-established team. You should start with a mentor who can walk you through several purchases. Mentors should be willing to allow you to shadow them through several purchases and the property management process before helping you with your first few. They should be open to providing guidance at any point during your purchase process. In addition, you should develop relationships with reputable contractors, realtors, real estate attorneys, CPAs, and mortgage brokers.
Fully Analyze Your Market
Now, you have the support necessary to begin your search. Analyze the market you hope to invest in. Look at construction, buying, and rental trends. Review local economic trends and learn about local businesses. Do some locations have high turnover rates? Are some businesses not viable for your area? Does the area have the types of properties you are interested in purchasing?
After you set up your business and analyze your market, you can start looking for profitable properties but don’t forget to do your due diligence.
It takes time and careful research to invest in commercial real estate successfully. If you are interested in commercial real estate, you likely know the importance of securing the right financing. Porter Capital Group can help you secure the capital you need with a variety of recourse and non-recourse lending options. Whether you want to buy, renovate or refinance an owner-occupied or investment property, we can likely help.