COMMERCIAL REAL ESTATE INVESTING TIPSKEITH KNUTSSON

COMMERCIAL REAL ESTATE• Investing properly in Commercial Real Estate (CRE) takes

some preparation, research and patience.

• Expert investors agree that commercial properties are almost always a better deal than residential

HOW DO YOU KNOW WHICH PROPERTIES TO INVEST IN?

We’ve put together our best CRE investing tips to help guide you in your search.

MAKE THE DEAL WORTHWHILE• Getting financed or finding other investors to join in on a

deal with you is much harder if the deal isn’t “sweet” enough for everyone

• Your baseline for any CRE investing should be 10.

• Work with properties that have at least 10 units. Managing more units doesn’t always equal more work

• Make it worth your time AND money. The whole purpose of the deal is to make money. Will the work be worth the reward?

• Rome was not built in a day, and neither were any successful Commercial Real Estate deals.

• Commercial property deals take much longer to close than residential real estate deals

• Will the property require any maintenance or repairs? How will this effect property resale value?

• Take the time to think about your investment. Will it be worth your time? What are the risks? Do you have a back up plan?

PATIENCE IS KEY

CONSIDER ALL YOUR OPTIONSApartment properties are typically the first thing that beginner CRE investors look for.

• While apartments can be a lucrative opportunity, don’t rule out other property types from your search

• Many investors overlook office and industrial buildings and go straight for apartments. Use this as an advantage as there may be many missed opportunities on other commercial property types in your search area.

IT TAKES EFFORT AND TIME• Many beginner commercial real estate investors get

discouraged when their first deal falls through or takes a long time to get started.

• Get used to the idea that not every deal is going to be a homerun!

• The best deals seem to take extra time and extensive research.

• The more work and research you put into the project the more likely the deal will turn out to be a success.

KNOW YOUR NUMBERS• Be familiar with your formulas before walking into a deal

• Before you make an offer on a commercial real estate property, know which rates are in your area

• Keep on top of changing industry and formulas. Keep in mind that formulas that work for properties in the United States may be different for CRE properties abroad.

• Consult or partner with a trusted expert in Commercial International Real Estate Investing, especially if you’re new to investing overseas.

USE THE POWER OF NETWORKINGWhen some people hear the word “networking” they recoil in fear of uncomfortable mixers and small talk. While these situations may be unavoidable, recognize the benefits networking can have on your business opportunities.

• Build relationships with other CRE investors and private lendors. Many times deals are made as a result of these relationships even before properties are listed.

• The larger your network, the better! It’ll help you stay on top of listings and happenings in the industry.

SECURE FINANCING FIRST• Commercial Real Estate loans are much different than

residential loans. They can be harder to secure and typically have more stipulations and require more cash for the down payment.

• Know how much you money you can qualify for before putting in an offer or even get prequalified before you look for a property.

• Be patient as commercial real estate loan processing can take time and typically requires a lot of paperwork!

PARTNER UP• Finding reliable partners that you can trust is an extremely

important task

• Most deals will need to be shared between multiple investors as commercial real estate properties typically cost much more than residential properties and qualifying for a CRE loan with just one person can be very difficult

• Splitting the risk and reward with another person or entity can help with peace of mind as well as allow you to spread your investments across multiple deals.

DO YOUR RESEARCH• Know the questions you need to ask before you visit a

property. Write them down if needed so you don’t forget!

• Use the experience of friends In the business. Ask a trusted expert for advice on a deal or for a second opinion. Experience is your best friend in the CRE world!

• Explore all angles of your project. What roadblocks can you predict and how are you planning on getting around them?

RECAPFollow the tips we laid out and you’ll have a good foundation for starting any commercial real estate project.• Make the deal worthwhile• Patience is key• Consider all your options• It takes effort and time• Know your numbers• Use the power of networking• Secure financing first• Partner up• Do your research