Commercial Real Estate Investment Starts With “Why”

Updated on July 31, 2020

If there is one thing savy investors have in common, it is commercial real estate (CRE). A well established commercial property with excellent cash flow is an excellent investment. CRE investment can be more lucrative and scalable than residential properties. For a long time, this type of rental property was reserved only for institutions with large pools of capital or the extremely wealthy. Today there are several investment opportunities that investors can consider if they want to invest in commercial real estate. 

What Is Your Commercial Real Estate “Why”?

Let’s do as Simon Sinek does and “Start with Why”. Why do you want to invest in commercial real estate? CRE is a vast investing landscape with several different opportunities. Don’t try to figure this out after you have invested in an apartment building or with a REIT. Look beyond the bottom line at what you want your goals are aside from a healthy rate of return. 

A World Of CRE Options

There are many opportunities in this space and many ways to embrace the opportunities. Many different versions of Multifamily apartment buildings, office buildings, retail centers, industrial complexes, and more to choose from. Once you identify what you like there are several different ways you can get involved. The first question to ask yourself is “how active of a role do I want and can I afford to have?”. If you have the time and capital to purchase an office building and that has been a dream of yours, it is worth considering. If you are a busy professional who wants to invest in a budding market out of state that you like to visit, you can look to find a sponsor that is currently investing out there. 

Prepare Your Financing

Commercial real estate generally has a more expensive purchase price than residential real estate. Most investment property will require some sort type of financing. Financing is, therefore, an important part of how to get into commercial real estate. There are a number of financing options available, including traditional bank financing, crowdfunding, hard money lenders, etc. Try to lock up your financing before searching for your commercial real estate property to purchase. This will enable you to understand your financial restraints and execute the deal with more ease when the time comes. 

Hire The Right People

Commercial real estate takes a great team to execute a venture successfully. You will only be as strong as your weakest member. Your commercial real estate agent, broker, attorney, and property management all need to be of the highest quality. Other specialists may be needed for more complicated properties. Whether you are actively managing or passively investing, doing your due diligence on the team you are hiring or investing with can make and break an investment. If you are investing with a sponsor, their track record is incredibly important. How many commercial real estate deals have they completed? How did they increase net operating income (NOI) at previous holdings? How many square feet of CRE do they currently manage? Does their track record align with your goals? Maybe you like shopping centers as an investment vehicle. If they work mainly with apartment complexes, office space, or different types of commercial real estate, they might not be the right fit for you. 

Find The Right Deal

Now you have set your criteria and investment strategy. You know whether you are actively or passively investing. you know what property types and asset class you are looking for and in which real estate market.  The criteria you set should enable you to find an investment property that will align with your goals. 

Commercial real estate is a fantastic business, whether it is an addition to your investment portfolio or your full-time job. There are real estate investors who only work in the commercial real estate investment space and do extremely well.  Whether you are looking for passive income by investing with a private equity commercial real estate firm or a real estate investment trust (REIT) or you want to be commercial real estate investing full time on an active level as the property owner, find your “WHY” so that you can invest with purpose.

If you have any questions regarding the real estate investing industry, the team at First National Realty Partners is just a phone call away. We’re here to answer your questions and provide guidance about your investment opportunities. If you would like to know more about the benefits of private equity commercial real estate investing, please don’t hesitate to reach out. Our team is built with the best industry leaders, utilizing proven strategies that create great investment opportunities for you. Contact us any time when you are ready to learn more about the possibilities of investing in commercial real estate.

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