Broker/Owner of Commercial Professionals in Las Vegas for over 25 years, professional speaker and author of The Successful Woman’s Mindset.
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The initial step into commercial real estate is often a challenge for new investors. Whether you already have experience investing in residential properties or this is your very first real estate venture, you likely have a long list of questions and concerns about buying commercial property.
As a commercial real estate broker for 25 years, I have worked with buyers investing up to $150 million in properties, and I know it can be intimidating to enter the world of experienced investors. If you’ve been thinking about investing in commercial income property but have been stalled by your own doubts—How do I even get started? How am I going to keep up with big-league investors?—know that there is a place for you.
Follow these three achievable steps, and get started as a savvy commercial property investor.
Determine how much money you have to invest.
Before you do anything else, outline a clear picture of your finances. How much money do you have to invest in a property? Do you want to purchase in cash, or are you hoping to qualify for a loan to increase your investment amount?
If you do plan to take out a loan, always start by contacting your local bank to find out what your borrowing options are. Use this basic script as a guide: “I’m looking for a commercial real estate loan to purchase a property. I have this amount to put down; what size loan would I qualify for if I’m interested in finding an investment property?”
Be sure to ask the lender detailed follow-up questions to clarify the financing process; for example:
• Is the loan personally guaranteed?
• Is the rate fixed or adjustable?
• What is the loan’s term length?
• What percent is required as a down payment?
Develop knowledge of your market.
Once you know how much you have to invest, you can begin gaining more insight into your real estate market. Do you want to invest in the market where you live or in another location? Are you already interested in a certain commercial sector, such as apartments or industrial, office or retail? Do you like investigating on your own, or are you looking for more expert guidance?
If you prefer the DIY approach, learn everything you can about your market through online research (and if not, skip to the following step). Search basic terms like, “commercial real estate investing in Las Vegas” or “office space income property in Los Angeles” to educate yourself about the overall market and specific sectors.
As you do your homework, you’ll start to understand what your investment will buy in a particular market. For instance, you may find you don’t have the capital to purchase a multifamily apartment building, but a less expensive single-tenant industrial property is within your price range.
Find an expert in your market.
You will reach a point in your search when you are ready to work with an expert, whether you are still browsing possibilities or you already have a clear direction in mind. Spend some time on LinkedIn and Google researching commercial real estate agents with expertise in your market and sector (for example, “Dallas commercial real estate specialist” or “Richmond VA multifamily commercial real estate agent”).
Look closely at their professional experience. What properties have they sold? What clients do they work with? How long have they worked in the area? Contact your short list to see if they are a good fit for your needs.
Pay attention to your interactions from the beginning, and be clear about what you’re looking for in an agent: “I’m a new investor, and I’m looking for guidance in buying my first commercial investment property. My time period to invest is X. Do you have the time to work with me? Which sectors or investment properties do you think would be best to meet my investing goals in this market?”
Think of this process as interviewing and hiring someone to work for your business. You want to work with someone who is engaged, responsive and experienced, and who you can trust to guide you to make important investment decisions.
Becoming a successful commercial real estate investor starts with a strong foundation. Take your time laying the groundwork, and you’ll be well-prepared to invest in your first commercial income property.
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