How to Get Ahead Financially By Investing in Commercial Property – Commercial Property

Think of all the investment commercials you have heard and seen that admonish/encourage you to start saving money early in your working life. Messages like, “Take advantage of your company’s 401k program,” and “Start an IRA program,” are like investment mantras and there is a great deal of wisdom in those messages. But what also can be important is expanding your mindset to additional investment opportunities like investing in property.Risk and challengeProperty investing is often described as “high-risk, high-reward.” It may not be the ideal investment plan for the faint of heart. But it can be a good match for the investor who:• Likes a challenge.
• Has an enormous amount of patience.
• Can commit to a hands-on approach to managing the investment.
• Is willing to learn the business of investing in commercial real estate.Reducing riskThe first “risk” to reduce is a lack of knowledge in commercial property investment:• Learn all you can about the subject.
• Find a mentor to further your education.
• Consider partnering with a successful commercial property investor.
• Start conservatively.Next, don’t try to invest without help from a commercial estate specialist. The person you work with should be a fiduciary (one who will be working in your best interest). Industry writers recommend that your broker should be a member of the National Association of Realtors and adhere to its code of ethics. Most important of all, your broker/realtor should represent only you – not the seller, or not you and the seller.Making money on your investmentGetting ahead in commercial property investing is accomplished in several basic ways. Your investment can grow through income and appreciation/selling.• Income generally comes from rent. It also can be generated if your tenants are required to pay fees for contractual options (like right of first refusal on an adjacent space).
• Appreciation is another investment/money-making option. This is where the adage, “Buy low, sell high,” applies. Experienced property investors will buy the property at a low price, put a finite amount of rehab work into the property, possibly redefine the property to a more marketable purpose, and sell at a higher price. These investors make their money on flipping the commercial property, not on rental income.Types of commercial estates and income potentialThe type of commercial property in which you choose to invest can affect your earning potential. Consider the income opportunities in these properties:• Motels/hotels located in tourist or major business travel areas.
• New commercial construction can be highly profitable but requires serious knowledge of the industry (and significant financial backing).
• Small commercial properties like strip malls and small office buildings often have long-term tenants.
• Industrial properties include manufacturing sites, distribution centers, and warehouses. A financial plus here is that these tenants are usually responsible for most repairs and maintenance.
• NNN leases are often found in larger businesses and with stable tenant companies that lease long-term (like 30 years at a time). These tenants are responsible for all expenses, including property taxes and insurance.There is money to be made for the commercial property investor who is willing to start slowly, become knowledgeable, be focused, act conservatively, exercise patience, and work hard.Rarely will commercial property investment be your get-rich-quick ticket. But over time, it can significantly augment your retirement fund or provide you with the financial resources to fulfill other dreams and plans.

How To Find Commercial Properties To Buy – Commercial Property

So how do you find commercial properties that fit into your investment criteria? It can be challenging and it may take a while but it is definitely worth it.Before you start your commercial property search, you should know: what type of property, what rate of return (cap rate), and how much money you want to spend.And before you start looking for properties all across the U.S., I would suggest that you concentrate in your local market until you have enough experience to venture out.So you have all of those questions answered, so lets take a look at different sources for finding properties.Commercial RealtorsI would say that your best bet is to find a good commercial realtor to help you in your search. Not only can a good realtor locate the properties but they can also provide assistance with your due diligence (notice I didn’t say “do” your due diligence). Also, the seller of the property will usually have a realtor, so it is in your best interest to have someone representing you. By the way, it is usually the seller that pays the commission, so you won’t have any expenses with the realtor.If you’ve done your homework and know exactly what you want, you shouldn’t have any problem finding a realtor to work with you. I would interview at least 3 agents to make sure that it is a good match between you. A good realtor will find commercial properties that you have outlined, as far as type and price. On the other hand, don’t waste their time either. They get paid at closing, so don’t have an agent spend a year finding properties for you and you can’t make a decision or if you’re scared to make that leap. Nobody likes to work for free, so be aware of that.To find a commercial realtor, you can go online to the National Association of Realtors or you can also ask for recommendations from other investors or check out your local newspaper.So for whatever reason, you’ve decided not to use the services of a realtor, what other ways can you find commercial properties?InternetThe internet has exploded with different websites to help you find commercial properties. The most popular is loopnet.com. They offer free & paid viewing sources. If you are a serious investor, then pay the monthly fee to get the best properties. Also there is another website, costar.com. This site is geared towards commercial realtors but it offers excellent products.Of course, there are other real estate forums and user groups where you can find commercial property for sale. The only down side to the internet search, is that it is very limited when you are searching for local properties. For local properties, try craigslist.com.NetworkingAn often overlooked method for finding commercial properties is through networking. You can go to your local real estate investment group and post a flyer indicating that you are looking for commercial properties. You can try this also at Chamber of Commerce meetings. Also, join a local group of building owners, apartment owners, and shopping center owners associations.The above methods will offer you the best opportunity to find commercial properties. However, you can also try the classifieds in your local newspaper or thrifty paper. You can also drive around and look for “For Sale” signs. They might not be the quickest way to find a commercial property but it can’t hurt.