Are you thinking about investing in commercial real estate?
It’s a great idea, especially if you’re looking to diversify an existing real estate portfolio or simply take advantage of the opportunities available throughout the High Desert.
Commercial real estate investments come with a lot of potential benefits, and like all investments, they also have their own unique set of risks. If you’re a first time investor, we’ve got some tips based on our decades of experience in commercial property management.
Work With Commercial Industry Experts
Before you begin searching for properties or looking for loans, partner with an expert commercial property agent who knows the area and understands your investment goals. You want someone who specializes in the type of property you’re looking to purchase.
Whether you’re looking for commercial space, warehouses, or a set of retail storefronts, work with an agent who can show you the best potential properties. You also want a good property management background, too. This will help you understand what kind of rents you can expect, where your tenants will likely come from, and how you can market your property to potential renters.
As a first time investor, you will need a strong representative who has a deep knowledge of both the local market and the industry as a whole. You’re likely to have questions, and they’ll need to be anticipated and answered by your agent and property manager.
Qualify With a Commercial Lender
You’ll need to have your financing in place before you can make an offer on any commercial property, so make sure you have a lender lined up and something that says you’re pre-approved for a specific amount of money. If you’ve never applied for a commercial real estate loan before, you’ll find the requirements are a bit different than other loans you’ve secured.
Potential lenders will look closely at your personal finances, the financial standing of any businesses or other investments you own, and the type of property you’re looking to acquire.
You’ll find it’s much easier to search for properties and make offers when you’ve successfully been pre-qualified by a commercial lender.
Conduct Due Diligence – On Properties and Finances
Don’t rush into a deal just because a property is available and you’re ready to get started. Evaluate your own investment goals to make sure the property will work for what you want to achieve. Then, do some due diligence with your agent and property management partners ahead of time. You want to understand the property you’re considering and you want to know if the market demands a new store, office, warehouse, restaurant, or gym in that specific neighborhood.
Make sure you’re knowledgeable about not only the property you’re considering but about the market in general. Make sure you understand your numbers as well. The success of your real estate investment will depend largely on whether your numbers work. Get to know your likely Net Operating Income, and your cap rate before you move forward.
Commercial real estate is a lucrative and opportune field, and we’d love to help you get started. Please don’t hesitate to contact us at Preston-Lee Management Company. We’ve been providing property management services in the High Desert for more than 20 years.
