How to Buy Commercial Real Estate - Investor Success 101
Residential real estate investing is what most people think about when they imagine investing in the real estate market. However, that is only one side of the coin. Beyond the world of buying and selling houses, there is the vast landscape of commercial real estate investing.
Stepping into the role of a commercial real estate investor is like opening up the door to a whole new world of potential investments. From hotels to retail stores and beyond, the sky is the limit with commercial investments.
So, if you would like to learn how to begin investing in commercial real estate and how it can help you grow as an investor, you are in the right place.
In fact, to help you get started we would like to offer you a free strategy call to introduce you to our commercial financing team and the variety of commercial investments that are available to you. All you need to do is click the link below to get started now.
What is Commercial Real Estate - 8 Types
Before you can invest in commercial real estate, it is important to understand the eight different types of commercial properties that are available.
These types are:
Multifamily
Similar to residential real estate investing, multifamily commercial real estate covers properties such as apartment complexes, condominiums, and residential properties with four or more dwelling units.
You can also buy traditional residential real estate through a commercial lender.
Offices
Office buildings are commercial investments that are divided into three classes based on their condition and location.
Class A offices are in top condition and in prime locations.
Class B buildings are in good condition but may not be in the best locations.
Class C consists of properties that are not in the best condition and are not located in prime locations.
Retail
Retail properties consist of everything ranging from single storefronts and big box stores to large scale malls and shopping centres.
Industrial
This category consists of factories and manufacturing facilities as well as warehouses and large-scale storage facilities.
Hotels
This category is divided into three categories based on the amenities provided at each hotel. Full-service hotels often include things such as room service and onsite restaurants. Limited-service hotels are similar to full-service hotels but with fewer amenities. Extended-stay hotels are designed to accommodate guests who plan to stay for a week or longer and provide more personal amenities such as kitchenettes.
Mixed-Use Real Estate
Mixed-use real estate covers any property that fills the role of two-or-more of the previous categories. This includes retail stores with housing above or behind it, offices that are in the same building as storefronts and more.
Land
Land is considered a commercial property. This is a popular investment for people looking to watch it appreciate or developers looking for a place to build.
Special Purpose Real Estate – Special purpose real estate is any commercial property that does not fall into the previous categories. This includes entertainment venues, parking lots and more.
Discover How To Buy Commercial Real Estate With This Step By Step Guide
Understand Market Demand
Once you understand the different types of commercial properties that are available, take a moment to assess the local real estate market. Ask yourself the following questions. Which properties are in-demand? Which ones are in abundance? Which properties produce the best cash flow? Which ones appreciate the most? What will it take to properly manage these properties?
Using those questions, you can guide yourself towards the best properties and niches for you and your investment portfolio.
If you would like to research further, reach out to people in the communities you want to invest in and ask them what they wish was in the area or what the community needs/needs more of. This way you can build a clear picture of which properties are naturally in-demand. From there, you can convert existing properties into the types that people are asking for, or you could buy land and construct something new.
Build a Team of Real Estate Professionals
One of the most important steps in making any sort of real estate investment is hiring a team of professionals you can trust to guide you through the process.
Some of the most important people to remember when building your team are:
Realtor – Your realtor is your guide to the local real estate market. If you want to find the best properties available at the best prices, you need to make sure you find an experienced realtor who understands the ins and outs of the local real estate market.
Real Estate Lawyer – The importance of a good attorney is never stated enough when it comes to real estate investing. A professional real estate attorney can save you time and money during the closing process and will fight to protect your interests during the negotiation process.
Contractors – Very rarely will you buy a commercial property that does not need some degree of renovations or updates before it is ready for use. So, it is important that you hire the best available contractors who are going to perform the best job in the most efficient way. Do not waste money on cheap, under-priced contractors who will not do the job properly.
Mortgage Broker – When you are buying an investment property you want to make sure you are using a mortgage broker who is capable of connecting you with the best commercial lenders for each investment property.
That is why we recommend using our services at LendCity. Our commercial financing department is uniquely built to help you find the best commercial financing every time.
Regardless of whether you are buying a rental property or building a strip mall, they will ensure that you get the best available financing for your investments.
Go Shopping for Your Next Investment
Once you have done your research, come up with an investment strategy, and built your team, it is time to go out and start shopping for your next investment property.
While you are at it, let our commercial financing department start shopping for the lender best suited to you and your portfolio today. Our team can be reached at 519-960-0370 or you can visit us online at LendCity.ca Alternatively, you can click the link below to book a free strategy call with our team today.