7 Steps to Successfully buy Commercial Real Estate
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Episode Transcript:
Today, we're diving into the world of buying commercial real estate and uncovering the essential steps and considerations for investors. As a seasoned commercial real estate broker and investor myself, I'll be sharing my insights and tips on what you need to know before embarking on this lucrative journey.
First things first, let's define commercial real estate. It encompasses various property types, such as shopping centers, warehouses, residential rentals with more than five units, and even hospitals. These properties are specifically designed for business purposes and generating income. Understanding this broad category sets the foundation for your commercial real estate ventures.
Now, let's delve into the seven crucial steps involved in buying commercial real estate.
Step 1: Define Your Investment Goals
Before you begin searching for properties, take a moment to ask yourself why you want to invest in commercial real estate. Clarifying your investment goals will guide your decision-making process and keep you focused on achieving the desired outcomes.
Step 2: Explore Property Options
Commercial real estate offers a wide range of property types, from industrial complexes to retail shops and office buildings. It's crucial to weigh your options and choose the property type that aligns with your comfort level and expertise in management.
Step 3: Secure Financing
Don't start shopping without securing financing first. By getting pre-approved, you'll have a clear budget in mind and save time by focusing on properties within your financial capacity. Plus, having financing ready in advance enables you to move swiftly when the right opportunity arises.
Step 4: Partner with Experts
Just like in residential real estate, commercial real estate transactions require expertise. Seek guidance from experienced professionals, such as commercial real estate agents or attorneys, who have a deep understanding of the process. Choosing the right partners can make a significant difference in your investment journey.
Step 5: Conduct Thorough Property Search
Now it's time to dive into the property search. Stick to your chosen property type and keep your investment goals at the forefront. Remember, a property may seem appealing, but if it doesn't align with your goals, it won't bring you closer to success.
Step 6: Perform Due Diligence
Every real estate purchase demands careful consideration. Analyze the risks versus rewards, evaluate alternative properties, and scrutinize every detail before making a decision. Thorough due diligence ensures that the property fits well within your portfolio and aligns with your investment strategy.
Step 7: Close the Deal
When you've found the perfect property, it's time to finalize the deal. Consider including contingency clauses in your offer, such as an inspection contingency, to protect yourself during the transaction. Ensure all necessary insurance is in place and review all documents before closing the deal.
Commercial real estate offers valuable investment opportunities, but it requires diligent research and planning. By following these best practices, you can navigate the process with confidence and effectively diversify your portfolio.
This is Tyler Cauble, Signing off