Growing wealth with commercial and industrial properties can be achieved if one takes the time to learn the steps of being a good investor. Being prepared to perform the due diligence that a good investor always uses when analyzing commercial and industrial investments is critical to successful commercial real estate investing. Since knowing what you are buying is essential, you must concentrate on developing your evaluation skills. However, once you know what you want to buy, that’s just the beginning of the process. You must learn how to add value to the property through further development and be sure that you understand the financing end, as well as how to work with regional and local authorities to get the necessary permits for property improvements.
Most people mistakenly perceive commercial real estate as the hardest arena in which to do business. However, you’ll be pleasantly surprised to know that the commercial arena:
• Is the easiest to structure great deals
• Allows you to complete deals and structure them with seller financing, faster and easier than most residential deals
• Is often easier to obtain commercial property financing, because transactions produce cash flow
Banks look at commercial financing as an entirely different financial world. They expect to see a profit and loss and a financial or income statement on the property. Although they look to the investor for some degree of creditworthiness, they also look more keenly at the deal and at the property itself, which greatly facilitates your ability to obtain financing. With commercial property, many of these leases are two, three, and five years, instead of one year- which is common in residential housing leases- and when you own or control commercial property with solid long-term tenant leases in place you are a prime candidate for securing great financing or refinance options.
Commercial and Industrial Property – Overview
You will should explore several major types of commercial properties:
In residential real estate investing, you can create income through house and apartment rentals, there’s no doubting that. However, commercial rentals are considered better investments than residential properties. You can build financial independence in the real estate commercial investing world, and with less properties and dealing with a better class of tenant.
Although you can create income through rentals, you build wealth through the appreciating factor just by owning real estate that increases in value organically over time or through forced appreciation with income and/or property improvements. Appreciation can happen in a number of other ways, too, such as tax benefits and write-offs.
You’ll also need to educate yourself about real estate investment issues such as:
• Financing properties
• Real estate cycles and
• “Hidden Market”
It’s our opinion that you can make more money in the “Hidden Market” of the commercial arena, than in any other market. “Hidden Market” properties are properties that may be for sale but are not listed.
So, it’s exciting to start to learn that commercial investing is actually, in many ways, easier than residential investing.
In 1989, Stew Spence became a full time real estate investor, and has bought, sold or been on the business end of hundreds of r.e. transactions, both large and small, numerous diverse types of transactions totaling over $40,000,000 including commercial, mobile home park, multi-family, condo conversions and land development projects with a specialty in foreclosed properties needing rehabilitative construction. Now semi-retired, Stew is still an active investor and has trained thousands to succeed with real estate. Today, he is also retained as a Board of Advisors member with HIS Real Estate Network, residential and commercial real estate buying group.