Are you thinking about investing in a real-estate deal?
Even if you’re a veteran investor in residential properties – someone who buys single-family homes to rent, for example, or a house flipper – you’ll need to learn the ropes when it comes to commercial investments.
Here are five tips:
1. Knowledge is power. Do your due diligence. Don’r skip due diligence. Make sure you’re knowledgeable about not only the property you’re considering but about the market in general.
2. It’s all about the numbers. Sure, location matters, just as is does for residential real estate, but the success of any commercial deal is dependent on whether the numbers work. And, to understand the numbers, you need to know the lingo – intimately. Make sure you understand the formulas for net operating income (NOI), cap rates and other applicable finance terms. There’s no excuse for not understanding these crucial principles.
3. Consider all sectors. Many new investors plan to start with small apartment buildings, but multifamily may not present the best upside potential in your particular market. So, consider alternatives, such as retail, net leased properties or even self-storage.
4. Think about financing upfront. Commercial loans require a lot of paperwork. It’s helpful to establish a relationship with a lender in advance and to familiarize yourself with the application requirements.
5. Surround yourself with professionals you can trust – a commercial real estate agent, real-estate attorney, accountant, insurance agent and general contractor.
We have you covered with our preferred vendors.
Contact us today to get started. (770) 627-3325