If you are thinking about taking a huge step and want to invest in commercial property, educate yourself thoroughly. Unlike residential real estate investing, the investment in commercial real estate is huge. The costs, down payment, closing costs and the liabilities are much higher. Most owners of commercial real estate want a secured lien on real property.
Commercial real estate investing
Description
Commercial real estate encompasses many avenues. Property that is included in commercial real estate is large apartment complexes (5 or more units), malls, shopping centers, restaurants, garages, storage units, store front business, franchises and more.
Investment
Investing in commercial real estate is not just buying or purchasing the property. You can invest in a Jack-in-the-Box franchise and this would be investing. As a beginner, you should take this very slow and learn from a professional, such as a real estate investment club or a commercial broker. Never trust your livelihood to an inexperienced residential real estate agent.
Real estate investment clubs
Joining the club
One of the easiest ways to learn about commercial real estate for beginners is to join a reputable real estate investment club. Commercial real estate investors will join an investing club to invest little money and have joint ownership in many properties.
A real estate investment club will buy properties jointly and then rent them out. So, if they buy a half million dollar apartment complex with eight units, the entire complex is rented out and managed. All owners of the complex will share in the losses and the rents.
Each owner pays a share of the down payment, closing costs and any payments attributed to the ownership, such as management and maintenance fees. After being a member for a few years, you may have enough knowledge to invest on your own.
Making fourfold on investments
Search for investment
The law of averages works on investing. Remember the old saying, "You scratch my back and I will scratch yours." Finding viable investments will take being associated with the right people. These people will include:
- Brokers and agents
- Loss and mitigation departments at banks
- Lenders
- Title companies
- Newspapers
Each one of these groups can help you with potential leads to a good foreclosure or property in distress. Buying a property and then reselling the property takes making a fourfold profit. So if you invest $10,000, you need to have a $40,000 profit. So, in other words you must have the potential to make $40,000 when you sell the property.
You will have to pay the mortgage, refurbish the home and pay to resell the home with closing costs and agent fees. if you do not make three or fourfold, walk away from the investment.
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