Investing in commercial real estate is a great way to build wealth as a business owner. Compared with residential real estate, commercial properties offer a higher return on investment, less competition from other investors, and more consistent cash flow thanks to long-term leases and the ability to house multiple tenants. But breaking into the world of commercial real estate can be challenging for new investors. From learning the ropes to working with commercial real estate professionals like DOC Real Estate, this guide breaks down what you need to know and how to get started.
Assemble Your Buying Team
Working with experienced real estate professionals can help you avoid common mistakes made by first-time commercial investors. Those who are new to commercial real estate often make buying decisions based on investment returns without looking at all the other factors that influence the potential of a property. It’s also common for new investors to misunderstand the local market, overlook unexpected expenses, and fail to consider the current tenants and their earnings.
Commercial real estate investing is a team sport, so your first step is to assemble your team! Team up with a commercial real estate agent, mortgage broker, real estate attorney, and financial professional. You should be able to find qualified and experienced professionals by searching online.
Build Your Network
Networking is an incredibly important part of commercial real estate investing, especially if you plan on building a commercial real estate business of your own. Try to develop a relationship with various people who can benefit your real estate business in one way or another. For example, attorneys, architects, contractors, title companies, accountants, property managers, tenant screening services, developers, engineers, and marketing professionals can all come in handy at some point.
Specialize in One Type of Commercial Real Estate
When you first enter the world of commercial real estate, you will need to pick a specialty. Commercial real estate consists of several different types, including office, retail, industrial, multifamily, and special purpose. Some types offer a lower barrier to entry while others have the potential to generate a higher ROI. The best option for you will depend on a number of considerations:
- How much money do you want to invest?
- Should you structure your Indiana venture as a corporation?
- How long do you plan on owning the property?
- What is the market for the property type?
- Which risks are you willing to accept?
- How many tenants do you want to manage?
- How much income do you want to generate?
Never Stop Learning
Even if you’re familiar with residential real estate, investing in commercial properties can be intimidating. Take advantage of educational opportunities to hone your skills. While real estate investing courses can be expensive, you’ll learn a lot of useful information from the professionals running these classes. You could even get your real estate license! This is a great way to build your network, learn the intricacies of real estate, and save money on commissions when buying and selling properties.
At the same time, don’t underestimate the value of low-cost and free educational resources. Real estate investing books can offer an endless supply of advice from experienced professionals. Many industry leaders manage YouTube channels, offering free insights and tips based on their own experiences. To find investing advice specific to the real estate market, turn to real estate investing podcasts and keep learning on the go.
Investing in commercial real estate is one of the best ways to build wealth, but it isn’t easy. Even after you find the perfect property, navigate the buying process, and secure financing, you will spend a lot of time on property management. Thankfully, commercial real estate has the potential to generate substantial cash flow, so you might be able to make it your full-time job!
Are you looking for commercial real estate in the Indianapolis area? DOC Real Estate can help you find properties that fit your criteria. Call today! (317) 888-7333