If you are considering investing in commercial real estate, make sure that you not only have plenty of patience but that your goals are in sync and in perspective. This is the advice from commercial real estate experts in South Florida who also strongly suggest that potential investors understand fully the amount of quality time, research, the value of establishing important relationships and targeting the appropriate type of investment, is all part of the overall game plan.
Here are some well thought out suggestions from successful investors for those who are seriously considering jumping into the commercial real estate market.
1. Don’t limit yourself. Successful real estate investors think big. However, they also don’t exceed their budget unless they can.
2. Don’t rush: Buying residential real estate is a lot different than buying commercial properties, as it is a much longer process. From purchasing to renovating, to finding tenants and a million things in between, patience is required. Don’t rush through the course, skip steps or ignore the advice of professionals, as this is when bad decisions are made and can turn into a financial or legal nightmare.
3. Do your research: Don’t panic and get discouraged if your first attempts at securing a real estate property fall through. It takes time to look for the right commercial property, such as viewing various locations, making offers and negotiating, meeting with inspectors and loan officials. The list goes on but it’s safe to say, even the easiest of transitions often take longer than you would expect. It’s just the nature of the real estate industry.
4. Cultivate relationships: Creating a large network with other investors as well as professionals in the real estate industry are critical for getting the latest in listings, business openings and closings, referrals the latest deals as well as trends in South Florida. The more people you add to your list of contacts, the more informed you are.
5. Be prepared to spend money: Once an offer is accepted, it’s time to bring out the checkbook. You will have many expenses, such as an appraisal, property inspection and other procedures required by law. This is not to mention the updating, repairing, taxes, fees and such. The list does go on so buying commercial property is not for those who are willing to skip steps or constantly cut corners.
6. Look into funding prior to viewing properties: Financing a commercial property is different than buying a home. It’s like comparing apples to oranges in many aspects. Find the best lenders in your area who are highly recommended, as again, the process does take longer than other loan types. Also, using highly knowledgeable resources can often make the difference of whether you will qualify for a loan or not.
7. Don’t hesitate to ask the pros. Certain situations or issues come up every day when buying commercial property in South Florida. There are days you just don’t know what will come across your desk. Therefore, never shy away from meeting an experienced commercial investor for their advice and suggestions. Make sure that you are clearly educated on a matter before proceeding. Often newer investors hesitate to research issues, such as estimating insurance costs, to understanding various county codes. It’s a shame when this happens especially since the information is often so readily available. Yet deals have been lost because of this.
No one can promise a smooth and carefree commercial real estate transaction. If they could, then we have yet to meet them. But whether you are investing in a small property or a large shopping complex, the bottom line is that you are investing to make money. And while making quick cash may not be in the cards right away, the potential is great as long as one knows what they are doing from day one.
- Think big
- Take your time and do the research
- Create valuable relationships
- Be prepared to write checks
- Find the best loan companies
- Don’t be afraid to ask the tough questions
- Don’t skip steps and ignore regulations