Investing in real estate is an excellent strategy to build capital. Investing in commercial real estate is known for producing some of the highest revenue streams. If you have been investing in residential real estate and want to branch out into commercial real estate, this book will teach you all you need to know.
Why Invest in Commercial Real Estate?
Are you in the market for a commercial property Nova Scotia can offer? Commercial real estate is a very attractive asset class to invest in since it provides multiple revenue streams. If your residential rental property renters stop paying their rent, you will lose 100% of your income until you find a new tenant. If you own a commercial property with many units, you have multiple revenue streams to offset any vacancies. It is also a safer investment.
5 Steps On Investing In Commercial Real Estate
It is up to you to determine the best method for investing in commercial real estate based on your goals and preferences. If you want to actively own, manage, and invest in commercial property, here’s how to get started.
1. Identify Your Niche
Commercial real estate encompasses a vast array of property kinds that are examined, maintained, and rented in various ways. As a result, commercial real estate investment differs greatly from investing in residential real estate. For example, owning a storage facility is not the same as owning an apartment complex, mobile home park, or an Halifax industrial real estate
Each sort of property has its own set of expenses, leasing arrangements, and rental income sources. You must understand the distinctions between a triple net lease and a gross lease, as well as how to account for vacancy rates and compute the property’s net operating income (NOI), among other concepts.
2. Determine Your Market
After you’ve settled on the type of home you want to buy, narrow down your market. You can make investments in your community, city, province, or even further afield. The goal is to find a market where supply has not yet matched demand and demand for your CRE firm remains high. Examine the present and projected growth in the area and the vacancy rates and overall market performance for your industry.
3. Look For An Investment Opportunity.
Then, begin your search for an investment opportunity. There are numerous web portals for finding investment properties for sale. You may also use direct mail marketing or engage with a commercial broker who specializes in CRE investments to find sellers. You need to find a good commercial brokerage New Brunswick or any other province has to offer for you to obtain the best deals.
4. Obtain Funds
It is better if you begin working on obtaining finance as soon as the contract is signed. CRE can be funded in a variety of ways, including:
- Conventional loan
- SBA loan
- Crowdfunding or syndication
- Owner financing
- Private loan
- Bridge lenders
- Hard money loans
5. Manage The Property
When the loan is funded, the real work begins. You now own a commercial property for which you are responsible for maintenance and management. If the property requires improvements, you will be responsible for scheduling the repairs with contractors while keeping the day-to-day operations running smoothly.
These five steps lay the groundwork for active commercial real estate investing. This is meant to provide a high-level overview of the investment process rather than a detailed description of each stage of CRE investing. If you want to understand more, conduct your own research and work your way through this list.