Commercial Property: A Different Ballgame
Sometimes a successful single-family home investor decides it is time to go commercial. That person usually finds that commercial real estate investment is a different ballgame from single-family home investment.
Different factors come into play for commercial investment success than in single-family home investment. The sellers are a different type from single-family home sellers, with different styles and objectives. Also, commercial brokers are a different breed from residential brokers and use procedures that allow them to operate more effectively with their commercia buyers and sellers and lessors and lessees.
Let’s understand what we mean when we refer to commercial real estate. The field is usually divided into four categories. They are office, retail, industrial and land. The factors that assign a particular property to one category or another are generally location, traffic criteria, type of improvements, utilities provided and zoning or other restrictions on use.
The division by categories helps buyers and sellers, lessors and lessees and brokers and agents get together more efficiently for deals. It is part of the lore that needs to be learned when entering a new area. The technical aspects of commercial property investment is certainly knowledge that is required to operate in the field. However, the customs, protocol and procedures are also important, and should be on one’s agenda for learning and practicing. To master commercial property investment, one needs to become comfortable with all aspects which determine success.
There are some hurdles to be cleared for a single-family home investor to become successful at commercial real estate. There is no doubt it is worth the trouble, because of the new opportunities available in the commercial field. As is true with many things, nothing ventured, nothing gained. So why not give it a try? See Buying Commercial Property for a discussion.
Many variables come into play in speeding the growth of your real estate investment business. One of the most important is the availability and use of good financing sources. Another is the awareness and employment of available financial services. A third is creative application of the resources found in investment services.
Using these tools allows you to make large and rapid strides in developing your business. It takes some work and some practice, but you can master them fully if you concentrate on it. Just keep in mind that these areas are worth the trouble to learn, because they can give a great return on your effort.
The ability to secure financing for an investment when you need it is critical to achieving success. This is true on an individual project basis, and is especially true in a long-term investment business plan. A successful real estate investor attends to the financing aspect of his or her business in the early stages of its development.
For a listing and ranking of the best real estate and related financing sources, go to Top 10 Financing Sources.
There are several reasons to keep your mind open to a property trade, and to be ready to trade when circumstances dictate. Many real estate investors do not understand the the basic facts of trading. They have never considered a trade, much less done one. If you will take the time to learn about trading, and learn when trading might be a great solution to a problem, you will be far ahead of many real estate investors.
Sometimes you find yourself with a real estate investment that just won’t sell at a price you can accept. For whatever reasons, the property you want to sell is just not attracting interested buyers. Maybe it is not attracting buyers because of its location, or because it is the highest-priced house in a neighborhood, or because it is has special-use improvements, or because financing the property offers challenges.
Whatever the reasons for the slowness in selling, the difficulty may be overcome in a trade where both parties to the trade get something they want. It is possible that the other party to the trade is dealing with issues of slowness in sale or lack of buyer interest just as you are. Either or both partners to a proposed trade may have tax considerations that point them in the direction of a trade.
In any case, you will be better off if you have the basic ability to evaluate and execute a trade. You may, through a trade, solve the problem of owning a slow-moving property. You may accomplish more than that. You may find value in the property you trade for that did not exist for the previous owner. When you find yourself in such a situation, It is time to open your mind to a trade. See Property Trading Facts.
