Real estate can be a fickle industry, whether you’re buying your first home or third commercial property. To the beginner investor, it can all seem pretty overwhelming. The following six steps can help your first venture into commercial property be highly successful.
1. Analyze Your Current Financial Position
It’s important that your current financial position be able to sustain a venture into commercial real estate. Do you currently have a lot of debt weighing down your credit rating? Is your debt-to-earnings ration too high for a lender to approve a loan for you? Ask the serious questions and once you have the answers, you can figure out how much of a loan you may qualify for and how to fit commercial real estate investing into your portfolio.
2. Make Sure You’re Qualified For Purchasing Commercial Real Estate
Even if you believe your financial health qualifies you for a new investment in commercial real estate, a bank or other lending institution may not concur. Therefore, it’s in your best interest to speak with a loan officer prior to making any real future plans. Also, once you’re qualified, you’re in a much better position to go looking for properties, where you can tell a seller or real estate representative that you’ve already been cleared by the bank.
3. Set A Clear And Attainable Goal
While you may be interested in making a major purchase, the goals you set starting out in commercial real estate should be attainable and grounded. It’s not always necessary to start small, but you do need to start within the confines of what your financial situation and lifestyle, if you’re going to personally manage the property, will allow.
Set your sights on a property that’s within your budget and one that you can run, while still keeping up with the rest of your life. If you’re going to hire a property management firm, factor that cost into your budget as well.
4. Start Looking At Properties
Set aside quality time in which to meet with sellers and real estate agents, giving them a clear idea of what you want to purchase. Let them know what you’re qualified for, any specific industry you’d prefer in terms of commercial property and what your end goals are, such as holding the property for an unlimited time or selling it soon after buying.
Consider the condition of the property, how much you’ll have to spend on it, if any and other influential factors, such as the distance from where you live, neighborhood, taxes, etc. Know all the details prior to committing to any deal.
5. Negotiate Your Best Deal
Negotiating a commercial real estate investment may or may not be complicated, depending on the circumstances. If you want to buy at a lower price than what’s listed, tell the seller or seller’s agent. Point out flaws and fixes that you’ll be responsible for and deduct their costs off the price you’re being asked to pay. Chances are pretty good the seller will see things your way and accept the deal. Unless the list price is below market, you shouldn’t accept it as-is, but rather, push the limits of the seller somewhat, in order to get your best deal.
6. Maintain, Improve And Promote Your New Commercial Property
After you’ve purchased the commercial property, be sure and keep it up to code and to the satisfaction of your tenants. You don’t want to face hefty fines for not being compliant and the worse-case-scenario for any building owner is a high tenant turnover. Keep them comfortable and try to meet their needs, so long as their reasonable. You also want to promote your property to increase potential tenant interest and the interest of other possible investors, even if it’s in the future.
Most especially if you’re interested in adding together properties to your investment portfolio, the relationships you forge and the image you present are crucial to your success.
Like any investment, your venture into commercial property should be well-researched and highly calculated. Don’t let any aspect intimidate you, though, as the return in this field should make it really worth your while. To know more contact us or visit the website at https://3cre.com/.