3 Tips for Investing in Your First Commercial Property

Posted on: 21 November 2016


Investing in real estate can be a path to wealth, and many savvy investors are drawn to commercial real estate due to its good return on investment. Whether you want to purchase an apartment building, an office building, a warehouse, or retail space, it is important to understand the market and how commercial real estate works to help ensure that you get the best deal. If you plan on investing in commercial real estate soon, use the following tips.

Arrange Financing

Before you can begin looking at commercial properties, it is important to secure financing so you know how much you can actually afford to spend. The overall price of commercial real estate is typically more expensive than residential properties, so you may have to visit several lenders and submit a lot of documentation before you are approved for a loan. You may want to consider working with a partner when buying your first commercial building to increase your buying power—just make sure you select a partner who you trust and involve lawyers to protect your interests.

Work with an Experienced Commercial Real-Estate Agent

As a new commercial real-estate investor, you should have an experienced real-estate agent as one of your most valuable resources. While it is important to educate yourself on common commercial real-estate terms and learn about the buying process, having a commercial agent who has successfully closed many deals will ensure that you have someone working on your behalf and guiding you in finding the commercial properties with the best value.

Be Prepared for Due Diligence

In commercial real estate, due diligence is similar to the inspection period that buyers have during residential real-estate deals. But due diligence for a commercial property is typically longer and more expensive than its residential counterpart. You will need an appraisal and a commercial building inspection. Make sure you spend the money to hire a very experienced commercial building inspector; his or her report can determine whether you are making a great buy or are about to invest in a money pit that you will lose money on in the long run. 

In addition to an appraisal and commercial building inspection, you may need to order additional tests and inspections depending on what type of commercial building you want to buy. As a commercial real-estate investor, you have to be willing and prepared to walk away if you learn things about the building during the due-diligence period that makes the property undesirable; you may lose a few thousand dollars after paying for appraisals and inspections, but that is better than saddling yourself with a property that is not a good buy. 

Talk to a company such as AccuPro Inspection Services for additional help.