When buying your first commercial property, you have to secure financing and plan several steps ahead. Commercial properties are a lot different from residential properties and require a lot more research. Before you begin, you should decide your motivations and how you plan to achieve your real estate goals. Then, you can follow a simple several-step plan to help you find the perfect commercial property within your budget.
How To Buy A Commercial Building
You will need to work with a banker, a team to manage the commercial property, and a realtor to help you scout properties. Getting organized is your first step for your new real estate investment.
What Is Your Motivation?
If you haven’t decided what you plan to do with the property, then you can review these popular strategies you can apply in your methods.
Owner-Occupied
This is when you purchase a commercial building that already has occupants or businesses in it. It provides you annual income.
Development
You can start a development project when you purchase raw land and construct new commercial properties on it. You will need to develop all aspects of the commercial real estate including foundation work, plumbing, electrical, roofing, commercial flagpole installation, exterior finishes, and parking to maximize property value.
Fix And Flip
You can buy commercial real estate, make upgrades and repairs, then resell it at a profit margin.
Passive Investing
Instead of managing the commercial property, you purchase it for passive income. A team runs it for you instead.
BRRR Method
This is a popular approach where you buy, rehab, rent, refinance the property, and repeat the process.
Wholesaling
When you find a property on discount, you put it under contract. Then you sell the contract to another owner for a small profit.
Choose One Of Many Commercial Property Types
There are many types of commercial properties you can choose from. For example, there are apartment buildings, corporate complexes, industrial warehouses, retail shops, malls, office buildings, mixed-use buildings, and more. Each commercial property type comes with its own unique needs and requirements. Therefore, it would make sense to perform research on the building, the area, taxes, and the income you expect to make.
Secure Financing
You will have to find a way to finance your commercial real estate property purchase. According to Home Care Contractors, you can get seller financing, apartment loans, commercial real estate loans, business loans, and hard money loans. You can compare the repayment terms, interest rates, and other fees when shopping for loans. Your credit score, borrowing history, and current financial means will be considered.
Get A Team
When you purchase a commercial real estate property, it will require many individuals who will work towards making this financial transaction a success. You will need a commercial realtor, a commercial real estate attorney, mortgage broker, accountant, and tax attorney. After you purchase the building, you can hire a contractor to help you repair and remodel parts of the property.
Perform Research
Before you make your purchase, you need to figure out what the neighborhood is like and the financial risks you may be undertaking. For example, if there is low foot traffic, you may not have a lucrative property if it frequently becomes vacant.
Other Ideas For Commercial Building Purchases
After you pick a commercial building you plan to purchase, you can start budgeting the cost of repairs you intend to make on the property. A helpful contractor can help you develop a list of expenses that you can later add to your mortgage plan.
