If you've never made a commercial real estate investment before, you probably know that these investments can be lucrative -- and they can also bankrupt you. As such, you'll be eager to know some tips for successfully finding and buying the right property.
The following four tips below can help you find success in your next commercial real estate property investment:
- Learn the biz: If you're going to be a player in the commercial real estate market, you need to get with the lingo and understand what the pros know. For example, you'll need to know that the most successful loan applicants for commercial property arrive with about 30 percent of the cash to put down. Also, you need to know that most commercial real estate leases that you make will last years; they won't just be for 12 months like most residential leases.
- Make your plan: You'll need to set parameters about how much money you can spend, where you want to buy and the type of property you want to buy.
- Find the good deals: There are a lot of tips and tricks for identifying the best real estate deals. For example, look up the terms Net Operating Income (NOI), Cap Rate and Cash on Cash. Educate yourself, use your calculator and develop your "landowner's eye" to pinpoint the best deals out there.
- Find sellers who are eager to sell: These sellers will want to free up the cash in their properties so badly that they'll be eager to sell at below market price.
Following the above four tips is a great way to start on your commercial real estate buying adventure. You will also want to learn about real estate law and the legal aspects of buying and selling commercial property in Colorado.
Source: Investopedia, "7 Steps to a Hot Commercial Real Estate Deal," Brian O'Connell, accessed Dec. 6, 2017