Are you in the process of deciding whether investing in commercial real estate is right for you? Perhaps you have already made the decision but have found yourself stuck searching for properties or attempting to find a deal that works for you. Investing in commercial real estate can be an incredible opportunity. It should be noted that, compared to residential real estate, commercial real estate allows investors the opportunity to diversify into multiple property types.
If you’ve already spent time working in residential real estate, and are interested in making the move to commercial real estate, one of the big questions you likely have is, “How do the two differ?” The biggest differentiator is that commercial real estate typically involves higher dollar amounts, and that can be a bit intimidating for someone who’s new to the game. On the whole, commercial real estate tends to be more complex, involving a large number of variables.
To be successful in commercial real estate, one of the most important things you will need to know is how vital patience is in this type of investing. A residential deal can be completed in weeks or months, while a commercial property deal can take upwards of years to be completed. You will also need to overcome the learning curve associated with investing in commercial properties, including new lingo, learning how to be a landlord and much more.
Tips for First-Time Commercial Real Estate Success
No two deals are ever the same, even in commercial real estate investing, but there are some things first-time commercial real estate investors can keep in mind to simplify the process and ensure they are getting the most profit possible for their investment.
Tip #1 – Know Your Market
Perhaps one of the most important aspects of investing in commercial real estate is knowing as much as possible about your market. For example, it pays to go into a property with multiple tenants knowing as much as you can about market rental rates of those individual units. Knowing as much as you can about market occupancy levels and expenses of a building you are considering investing in can also be a big factor in making a good acquisition. The details you know regarding the market can make or break a solid commercial real estate investment.
Tip #2 – Understand a Project’s Value
It’s important to understand the value of a property, not just going in, but at all stages of the investment. Having a good idea of what the property’s value will be once any renovations and tenant lease-up have occurred can be an incredibly large component of making investments that are right for you and your needs while also being worth your time and money.
Tip #3 – Have an Exit Strategy
Different people invest in commercial real estate for different reasons, but one thing that’s universally important is having an exit strategy in mind, regardless of what you plan to do with your investment property. BMC can help investors with a flexible exit strategy. Long guaranteed income periods with attractive yields typically represent the best conditions for a flexible exit, and BMC can help its clients with the development of these exit strategies.
If you’re interested in becoming a first-time commercial real estate investor, Bay Mountain Capital is here to support you. Simply contact us and we will help you learn more about the process and get you started with the commercial project of your dreams right away.
About Bay Mountain Capital:
Bay Mountain Capital has been in business for more than a decade, closing approximately 2,000 loans. We specialize in financing all types of residential and commercial property investments throughout Texas and Georgia. Using common sense and value-added approach, we strive to incorporate these principles into our underwriting and closing processes.
As a direct lender, Bay Mountain Capital can close a loan within one day after receiving a complete file and clear title. The process generally takes two weeks for a residential loan but can be accelerated where circumstances require it.
We are primarily an asset-based lender, which means that qualification requirements are limited. Our rates and fees are among the lowest in the industry.