How to Get Started in Commercial Properties
Investing in commercial properties is a great way to make a lucrative income, as long as it's performed correctly. Investment properties are generally worth more than residential properties, so while the reward is higher, the risk is also higher. Investing in these properties requires a good sense of the real estate market and an eye for discounts.
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Instructions
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Research the commercial real estate market in your area. One of the ways to accomplish this is to do rudimentary research on the Internet to garner a limited understanding of mortgages, buying and selling to companies, interest rates and rate of capitalization (or the rate at which you will make money from your investment when compared to its purchase price).
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Network with other real estate professionals. If you're out of the loop, this will be challenging, but begin by contacting commercial real estate agents and offer to take them out for drinks or dinner in order to simply ask questions about best practices. The wisdom of a seasoned investor is far more valuable than enrolling in a course.
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Be honest about your resources. If you're struggling with debt or are saddled with other financial obligations, you will want to clear those up before making a large investment. Also, a best practice is to have at least enough capital to make a 10-percent down payment on an investment property (not necessarily to use as a down payment, but more as a buffer to guard against losses).
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Stay in the local area. The more you know about a particular town or neighborhood, the better position you'll be in to begin. Or, even better, get to know a business owner who will get you the scoop first on a solid, potentially profitable investment. Join the Chamber of Commerce and get to know local business owners. Join other business communities--especially in the field of contracting--to continue to develop relationships with potential tipsters and sellers.
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Be patient. Becoming overzealous and making a bad decision on a property could saddle you with an unmanageable property and could potentially sink your business even before you've begun. On your first purchase, bring on a lawyer and a seasoned investor to prevent making mistakes in financing and to gauge the structural integrity of a building.
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