10 Tips For Commercial Real Estate Investing
Any plan to invest in commercial real estate calls for right mental attitude, enormous patience and foresight. Not only do they take time to buy and close the deal, but also to repair, restore, remodel and resell. This apart, you should also be prepared to spend long hours of research, cultivate the right business relationships and take crucial investment decisions at the appropriate time.
The safest way to embark on commercial real estate investing would be to start on a modest scale and gradually opt for higher investments. It may be worthwhile to become familiar with ten valuable tips in commercial real estate investment offered by experts:
1.Be clear in your mind that you are an investor and not a senseless accumulator of commercial properties. The idea of making commercial real estate investments is to produce handsome profits. So, if you mindlessly buy a commercial property that produces no profit on resale, you really just acquired a property instead of making an investment.
2.Determine whether you and the commercial properties are fully protected before buying. All your commercial real estate investments have to be totally separate from one another so that one lawsuit does not in any way affect the other investments. Talk to a lawyer to ensure that you are personally protected if you're sued for any reason.
3.Please be aware that commercial real estate deals take longer to conclude and to realize profits than residential houses. Commercial property takes longer time to buy, more complicated to renovate, and relatively more difficult to sell. But the great attraction is greater rewards. Therefore, bear in mind you have to be patient and not or rush into making bad decisions. Think of commercial deals as big deals and not a short cut to acquire quick profits.
4.There's nothing bad or undesirable about residential real estate investing. But commercial real investment like office buildings, industrial, mobile home parks, land, etc is a different ball game and you should know if you are cut out for this type of business. Study all property types and select your own niche based on your comfort zone and whatever will help you attain your profit goals without much strain.
5.Do not feel disheartened if you spend more time concluding a deal. Please know that this of time consumption is the norm in commercial real estate deals. Commercial real estate is a dicey business and buying / selling entails protracted negotiations. Please also bear in mind that there is a learning curve and things will fall in place once you get into the groove.
6.Please know that continuing cordial relationships with fellow investors and private financiers are essential when buying/selling properties - more so, when dealing in commercial properties. Many commercial properties are sold without being listing first, so you need to keep more contacts in your network who know what you are looking for to buy or sell. For buying high value commercial properties, you will have no choice but to work with partners.
7.The process of obtaining commercial loans is different from residential loans and has its own peculiarities. The initial down payments are usually of a higher percentage than loans on family houses. This means you will have to set apart more seed money. However, the saving grace is often there is no personal liability if the deal flops.
8.When your offer is accepted, you will be allowed a reasonable period of time to complete the formalities. You can get an appraisal, property inspection, and other tests / inspections required by law. The only disadvantage is that these formalities will cost a lot more for low value deals. You might end up spending money on the preliminaries, only to decide you do not want to buy the property after all.
9.If you are keen on million dollar deals which you should eventually be then it is difficult for you to qualify on your own. Spend time identifying private lenders or deal partners to support you. A resourceful partner can provide the money and/or credit needed to purchase high value commercial property and you can part with an agreed percentage of the profits from the sale.
10. It is essential that you associate with experienced professionals/real estate agents who can answer questions that come up while you are evaluating commercial properties or buying them. You should not lose a profitable deal or unwisely buy a bad property. You should also understand all the laws and regulations in force.
by: Real Estate Investing