Investing in commercial real estate is guaranteed to be a life-changer. CRE has the potential to be the most robust investment vehicle for the prepared investor, in that properties considered are inherently more lucrative. The usual route of entry would have you first consider single-property real estate (basically, traditional real estate), but first-time CRE investors far and wide have found success. The following are a handful of considerations to facilitate success.
No matter how good a deal seems on the front end, take your time and vet it according to the information you’ve gathered. Understand not only the commercial property itself; but the local market as well.
Understand Your Market
For example, just because multifamily residences are selling well on the national scale, doesn’t mean this is the optimal option for CRE investors in the market in question. If you’re near a university, for example, perhaps commercial self-storage units would be much more profitable.
Get the Technical Aspects of CRE Down Pat
Basically, it’s your responsibility to understand the numbers. This includes cap rates, the mathematical formulas for NOI (Net Operating Income), and the particular financial terms endemic to commercial real estate and real estate in general.
Have a Trustworthy Circle
Seasoned CRE investors all have one thing in common, which has contributed greatly to their success: they have an inner circle of professionals in their business (and sometimes personal) lives. These include contractors, real estate brokers, insurance agents, specialized lawyers, and accountants.
Get Your Financing In Order
You will need access to traditional loans, short-term bridge loans, and maybe even federal loans under the Small Business Administration or Housing Administration. These loans – save for the bridge loans – tend to be paperwork-intensive, and it is best to have the tutelage of a lender in understanding and acquiring everything that’s required.
For more information on financing tailored specifically to CRE investors, please contact Lionheart Commercial Capital.