When it comes to real estate and investment, professionals will jump to tell you about the benefits of investing in commercial property over residential houses. Commercial property owners enjoy a steady but strong cash flow, the rewards of bidding in a less competitive market, affordable property managers and also the bigger financial reward from their commercial investment. Whilst all of that is great, it is easier said than done so how do you find the best properties? To give you a helping hand, we’ve put together the following points to allow you to separate the good from the bad!
Get Some Inside Knowledge
To get into the sector and do well, you’ll need to think like a professional from day one. When it comes to income on commercial real estate, it is directly linked to its useable square footage – which isn’t the case when it comes to residential homes. In addition, the cash flow is more substantial when it comes to commercial and as leases are typically longer than that of a family home, it means more money! If you find yourself in a tighter environment when it comes to credit, speak volumes with cash. Commercial property lenders often look to get around 30% down before they’ll give confirmation on a loan.
Get A POA Together
Getting a plan and sticking to it is key when it comes to this. You need to be realistic and find out how much you can afford to pay and then shop around for mortgages to get an idea of how much you’ll have to pay over its duration. In addition, work out how much you expect to make on the deal, how much of space you’ll need to fill, how many tenants are on board and are paying rent etc. Basically, by preparing beforehand, it will allow you to know your limit and also to understand your earning potential on the property.
Learn to Know a Good Deal When You See One
The top real estate experts know a good deal when they see one. But what sets them aside? Well first of all, they have an exit strategy – the best deals are the ones where you know you can walk away from. It helps to have a sharp, landowner's eye – always be looking for damage that requires repairs, know how to assess risk and make sure to break out the calculator to ensure that the property meets your financial goals. You could save yourself thousands if you know when you act!
Find Enthusiastic Sellers
Like any business, customers drive property. Your job as a commercial real estate professional is to find them and more importantly, know the ones who are ready and eager to sell below market value. The fact is that nothing happens - or even matters - in real estate until you find a good deal, which is usually accompanied by a enthusiastic seller. This is someone with a pressing reason to sell below market value. If your seller isn't motivated, he or she won't be as willing to negotiate, meaning you’ll compromise or lose out on its potential. With that being said, the better the property, the less likely people will want to part ways with it so offering them a deal they can refuse will add that extra bit of motivation.
Scout Out the Location
A cost free way of finding out whether a commercial property is worthwhile is by scouting the neighbourhood the property is located in by going to commercial open houses, talking to other owners to get a scope on the potential and looking for other local opportunities.
Cover Your Search Basis
Find the perfect place by being clever in your search for the best deals. Don’t just stick to one source, use the internet to your advantage, read the classifieds, reach out to local commercial property management companies to help you find best properties. They will be able to help you find great investment opportunities for you to sink your teeth into.
Parting Note
As a whole, by locating and evaluating commercial properties it is never just about finding the opportunities, getting a great price, or sending even getting those sellers to approach you. The core of securing those good deals is in communication. It's about building relationships and rapport with property owners, so they feel comfortable talking about the good deals they how. This will then make you their go to when a potential business opportunity arises.
