Are you considering commercial properties for sale? Investing in commercial real estate can be a great way to earn passive income. But before you start looking at properties, you should consider a few things so you can find the best and right properties for your needs.
First, understand what is motivating you to buy commercial real estate. Once you understand what your reasons are, then you can find the ideal properties for your needs. Do you want an apartment or office building that you can rent out to multiple tenants to spread the risk of nonpayment?
Do you want a commercial property that you can use in part for your own business? Or maybe you want a bigger property with the possibility of appreciation to grow equity over the years. Maybe you want to enjoy tax benefits or diversify your investment portfolio.
Whatever is driving your interest in commercial real estate, it helps to understand why you are doing it before you start looking at properties.
Second, look at your commercial real estate investment options in the areas you are considering. The most common options are:
- Apartment buildings
- Office buildings
- Industrial buildings
- Mixed-use properties
Understanding which appeals to you the most will help you narrow down your options.
Third, you need to consider financing. Line up your financing before you start looking at properties. First of all, you should check your credit. Your business and possibly personal credit could come into play during the purchase.
Once you know what your credit is like, you will understand the credit you can get. Some of the options include:
- Apartment loans from FHA, Fannie Mae and Freddie Mac
- Bank Balance Sheet Loans
- Commercial Real Estate Loans
- Hard money loans
- Seller financing
Fourth, you need to work with the right team. Buying commercial real estate involves many moving parts. It can get complex. Even the most experienced investors know they need to have a good team of professionals around them to succeed in commercial real estate.
Some experts you should have in your corner include:
- Commercial realtor
- Commercial real estate attorney
- Commercial lender
- Tax attorney
Fifth, find the right commercial property in your market. With all the above information and infrastructure set up, now you can shop for the perfect commercial property in your market.
Once you have found some good options, you should do your homework and make sure the building makes sense financially before you pull the trigger.