How to Buy Commercial Real Estate – Commercial Real Estate Investing Tips – Part 1
Commercial real estate investing tips can help start you off on the right foot, or provide a good review for your current buying process. Solid tips are important to your commercial real estate investing, and can help you avoid costly mistakes.
1) Property Valuation… Knowing your market, the historical operating financials and potential of a property can help in determining the ultimate value to an investor. It is common to see expense loads for commercial properties from 25-50%. If the financials are understated or overvalued, your financing may pull-out in the ‘11th Hour’ of your transaction. Always request the Historical Operating Statements, Current Rent Roll and Operating Pro-forma in your searches for viable commercial real estate investments.
2) Existing and Alternate Uses… The potential future uses of a property can make commercial real estate even more alluring. Knowing how to buy commercial real estate in any given market, and target market, is a real consideration. During the recent housing boom in the early 2000's many condo builders turned to existing apartment buildings for conversion. The sellers were able to sell their buildings at unforeseen gains. Typically these properties weren't even able to support the requested debt at even a 60% loan to value, but with the increased demand for residential condo's this made sense to the buyer's, builders and bankers involved in the transaction. Always consider the costs associated with potential alternate uses. A variety of uses will always enhance your commercial real estate investment.
3) Location, Location, Location… Not so much of a secret, but always a major factor in valuation of any real estate. Always consider the location of your commercial real estate investment. Take into consideration, growth and changes that you have seen in similar areas and how they have affected the surrounding real estate. In some cities, where growth is imminent, properties just outside the growth line may be more desirable in 5-10 yrs. It will just depend on your strategy. Find an experienced Commercial Real Estate Agent/Broker to assist you in your search, a CCIM certification is desirable.
These commercial real estate investing tips, part 1 of 3, will get you started moving toward the cash flow you are seeking. Or, perhaps they serve as a reminder as to what you missed on earlier deals and want to spend more time on for any current or future ventures.
Luis Roque invites you to learn to earn high and even INFINITE returns investing in commercial real estate with a group (on money you used to have sitting in pathetic CD's at 4% or less) when you become a Select Member with America's #1 Real Estate Network today! Join us for an upcoming educational presentation online to get information or to get started now: Real Deal Commercial Webinar http://www.hisrealestatenetwork.com/383
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ABOUT THE AUTHOR
Luis D Roque has over 10 years of real estate and lending expertise working for the largest lending institutions in the US. Luis has also worked for investment companies as a consultant to oversee the investor relations, and residential real estate acquisitions departments achieving as many as 50 properties bought fixed and flipped for profit in a quarter. Luis is a managing partner of HIS Real Estate Network residential and commercial real estate buying group.