People who are looking into real estate investments often go for residential properties because they don’t necessarily require a large amount of money for down payment and the simplicity. The appeal for going into residential property investments is that they are really simple and easy to understand.
For those seeking to expand their portfolios, getting into the commercial property investments can appear a bit intimidating. The uncertainty of how to deal with commercial property can be very overwhelming, even to those who have become big fishes in the residential property investment world. To help with the transition, here are some tips from Sentinel Property Group to find better deals:
- Have an action plan – make sure that you have set the parameters before getting into the real estate deal. Think about the available funds you can allot for the property, the expected return for the deal, the tenants already occupying the place, and the rental space left to fill. Make sure that you have a strong plan to make the leap to commercial property investment easier.
- Get the insider info – in order to be in the commercial property investment business, learn how the professionals think. Be aware that residential and commercial properties are valued differently; with commercial property, the income is directly related to the usable square feet. Commercial properties also offer bigger cash flow. Pro-tip: make sure to have cash in hand, as lenders often require 30 percent down before agreeing for a loan.
- Recognise a good deal – professional commercial property investment companies know that a great deal is one that offers an exit strategy. Be aware that there are risks involved in investments, watch out for damages that need repairs, and check if the property can meet your financial goals.
- Use a “trident” approach when evaluating properties – this means utilising the internet, classified ads, and bird dogs (people who spend a significant amount of time looking for valuable investment potential for a fee). Studying the neighbourhood around the property’s location can also assist in evaluating its potential.
- Find motivated sellers – you have the responsibility of finding sellers who are willing and keen to sell below the market value. These are people who have urgent reasons to sell, thus they are more motivated and open for negotiations.
Investing in commercial real estate is one of the best ways to get financial stability. It can provide you with the wealth you are seeking, or drown you if you are not knowledgeable enough to handle it. In order to make a strong leap towards commercial property investing, it is always best to communicate well to build rapport with the possible property owners.