Five Tips To Catapult Your Commercial Real Estate Dreams Into Existence
You saw an office space for sale, on your way and you haven’t been able to get it out of your mind since. You’ve researched and spoken to a few friends who have experience in owning commercial real estate, but you feel more conflicted than ever. You know the possibility for failure is there, but you also know that the potential to succeed is just as present. Furthermore, You don’t know what steps to take or where to start, if you choose to move forward.
We’ve compiled a list of five steps to take, when you decide to move forward with pursuing the title of: Commercial Real Estate Owner.
1. Ask, Ask & Ask some more
This isn’t just about asking other people questions, although that certainly is part of it, this is also about asking yourself the important questions that will help you make a decision that you are fully confident in. Here are a few questions you can start with:
- Are you looking to use the building for your own business, rent it out, build equity, and/or something else entirely?
- What’s your situation regarding cash, financing, and/or ability to make a down payment?
- Would you be willing to partner with someone else on the property?
- What’s your risk tolerance?
- How much time can you commit to the property?
- How much work are you willing to put into the property?
- What skills/knowledge are you bringing to the table?
- Finally, are you ready/willing to make a investment/purchase of this size?
2. Learn & Learn some more
Start by familiarizing yourself with commercial real estate terms, get involved in commercial real estate owner groups and network with them. By immersing yourself into the world of commercial real estate, you learn and grow and will soon be ready to start the process of purchasing your first property.
3. Don’t jump at the first opportunity
You will be wise, to visit and consider many properties and do your homework on each one before making a final decision. Don’t get caught up in the excitement of the moment and make a decision that will lead to a nightmare. Do your due diligence and you will succeed in the long run. Here are few questions to consider when looking at the properties:
- What can/can’t it be used for?
- What kind of rent/income does the property currently generate per year?
- What kinds of taxes are there on the property?
- What things will need to be replaced or repaired soon?
- How is the area around the property doing? Any major upcoming changes? Think road construction or new housing/business complexes.
4. Find An Expert
Purchasing a commercial property can be a complex process and although you’ve learned a lot, you still owe yourself the peace of mind, of having a team of experts there, to help the process go as smoothly as possible. At a minimum, there are four people you should have on your team.
- A Commercial Realtor
- An Accountant
- A Commercial Real Estate Lawyer
- A Mortgage Broker
If the property involves more complicated matters, you could also need, experts in the engineering and environmental fields, for example. Having your core four in place, will give you the knowledge you need, to know if other experts will be needed. Your core four will make sure that you are covering every area and that nothing is left undone.
5. Work Out Your Financing
Most people, will need some financial assistance, in order to make a purchase like this, and likely you won’t be an exception. There are several options available for you, but it may seem overwhelming to know where to start, when it comes to figuring out your financing. Here is a list of questions to get you thinking and to help you prepare.
- What type of banks, credit unions or other home mortgage company could you use?
- What kind of credit do you have and what kind of interest rate could they give you?
- Would the owner/seller be willing to help with financing?
This may seem daunting, but remember that consulting with your Realtor and other experts, will help you know which financing option is right for your situation.
The journey to becoming a Commercial Real Estate Owner is an exciting one and we hope that this article has inspired, encouraged and educated you, as you prepare to take this next step. If you have any further questions, reach out to us here at VicGreen Realty and we will be happy to help!