Investing in Commercial Real Estate

Introduction

• The goal is to prepare you to buy your first commercial property.
• Five helpful downloads will be provided.

Choosing the Right Property Type

• Property Types
  • Office Buildings
  • Retail Spaces
  • Warehouses
  • Multi-family housing
• Considerations
  • Align property type with your investment goals.
  • Determine if you want steady cash flow or long-term appreciation.
  • Decide on tenant type (corporate vs. individual renters).
  • Assess day-to-day management involvement.
  • Consider hiring a property management company.
  • Assess your skills and preferences (hands-on vs. passive).
• Specialization vs. Diversification
  • Specializing can offer expertise.
  • Diversifying can spread risk.

Market Research

• Research markets with strong fundamentals (population growth, economic development).
• Focus on promising sub-sectors.

Types of Commercial Real Estate

• Multi-family
  • More than one unit, familiar to residential investors.
  • Creates multiple income streams.
• Office Real Estate
  • Multi-tenancy with varying tenant quality (Class A, B, C).
  • Capital intensive but potentially high value.
• Industrial Properties
  • Flexible, lower cost of entry.
  • Tenants tend to stay longer.
• Retail Real Estate
  • Shifts towards experiences due to online shopping.
• Hospitality Real Estate
  • Serves travelers; includes hotels and temporary stays.

Financing Options

• Creative Financing
  • Possibility of 0% down payment through seller financing.
• Traditional Loan
  • 20-25% down payment range.
• Owner Occupied
  • Possible 10% down payment through SBA loans.
• Raising Capital
  • Utilize investor capital for down payments.

Finding Investment Opportunities

• Regularly communicate with your network.
• Utilize social media to express interest.
• Consider off-market deals through brokers.
• Use various online listing services.

Making an Offer

• Submit a non-binding Letter of Intent (LOI).
• Provide proof of financial ability.
• Negotiate deal terms (purchase price, closing date).

Due Diligence

• Organize documents in a project folder.
• Verify all legal and financial documents.
• Physically inspect the property.
• Engage property managers and contractors for inspections.

Closing the Deal

• Conduct a final walkthrough.
• Prepare down payment and closing costs.
• Sign all necessary paperwork.

Post-Purchase Actions

• Plan upgrades and renovations.
• Communicate with tenants.
• Analyze and optimize property expenses.
• Consider reconfiguring spaces for better income.