How to Start Your Commercial Real Estate Business
If you are looking for a financial opportunity that is dynamic, exciting and challenging, then starting a commercial real estate business is worth consideration. It is a solid investment that can produce ongoing passive income and wealth building potential. Whether you are looking to buy an apartment building, shopping mall, gas station or anything in between, there are rewards and risks involved. The tips below can help you succeed in this industry.
Buying property requires capital. Whether you are investing your own money, securing a bank loan or both, make sure your personal finances are in order. Take inventory of how much you can afford to invest. In order to receive loan approval for your commercial real estate business, you will have to prove to the lender that you have the means to repay the loan. You will be asked to provide personal and financial documents, including a credit report and income tax returns.
The next step involves identifying the type of property you want in your portfolio. The options range from a small duplex to a downtown business tower. Depending on your financial profile, investment goals, skill set and personal interests, starting with a small property may be the best move. So, research the market in your local area for commercial opportunities. Check the local newspaper for sales and foreclosures. Also consider working with a real estate agent who can locate properties that are ideal for your commercial real estate business.
The location of your property impacts your bottom line. Analyze the demographics of your target area. Ideally, you will want a commercial building located in an area where there is steady or increasing economic growth. Is the median income at or above the national average? Is there expansion in the residential housing market? Are there any major retail operations? These are the type of questions you must ask to determine whether it is a thriving location.
It is also important that the property itself is sound structurally and financially. Examine the condition of the building. Hire an inspector if needed. Make sure it is zoned for commercial use. Ask the owner for a cash flow statement. If all pans out in terms of getting a return on your investment, then structure a deal that the seller can’t refuse.
The process of starting a commercial real estate business requires strategic planning, persistence and patience. Although there are risks, striking the right deals can result in steady income and long-term wealth.