Recent years have seen a real upswing in commercial investment opportunities. Commercial real estate is a popular investment option for many reasons. Often offering better deals than residential real estate, commercial real estate properties provide additional cash flow, beneficial economies of scale, open playing fields, an abundant market for good, affordable property managers, and enormous payoff. Fortunately, real estate investment companies like the one led by Douglas E. Fleit and Brian L. Katz are available to provide their partners with thoughtful insights and multiple strategies.
Like Douglas E Fleit and Brian L Katz, many investors know how to evaluate a good commercial property deal. For those new to the experience, however, the strategies that seem so evident to experts like Douglas Fleit and Brian Katz are elusive. This article seeks to provide a few tips for evaluating a good commercial real estate deal.
- Think Like a Pro: It’s important to know that commercial property is valued differently than residential property. Income on commercial real estate, unlike that of residential property, is related directly to its usable square footage, resulting in a bigger cash flow. Commercial property leases are also longer than those on single family residences. It’s also important to make offers with cash. Commercial real estate lenders usually like to see at least 30 percent down before approving a loan.
- Have a Plan: Know exactly what your parameters are. How much can you afford to pay? How much are you expecting to make? Who is important to the deal’s success? How many tenants are already in and paying rent? How much space is left to be filled? Make sure you have answers to all of those questions before you invest.
- Know What You’re Looking At: The best deals are the ones you know you can walk away from. Be looking for damage that requires repairs and know how to assess risk. If the property doesn’t meet your financial goals, walk away.
- Find Motivated Sellers: Find the sellers who are ready and willing to sell below market value. Someone who is motivated to sell will be more willing to negotiate, allowing you to get better deals on commercial real estate.
- Build Rapport: Sellers are more likely to want to work with someone with whom they have a relationship. Make sure property owners feel comfortable talking to you about the good deals, and you’ll find much greater success.
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