Investing from Scratch: Finding Buildings for Sale Near You
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
This article was updated on 7/31/2023.
For new commercial real estate (CRE) investors just getting started, it's possible to find buildings for sale near you that fit your own investment style and preferences.
As a new investor, you'll want to put your efforts into a commercial property, your first commercial property, that you'll be proud of, whose net operating income (NOI) gives you the profitability you'll work hard to earn.
But how do you go about finding buildings for sale near you that turn into profitable investments? There are a few things you should look out for and some questions you'll need to ask yourself first before signing on the dotted line.
As a new CRE investor, you have a long, exciting journey ahead of you. But the path is riddled with obstacles, including contractual legalities and commercial real estate sharks warranting sharp negotiation. That's why it's so important to start off correctly, to take the time to do things properly, when investing from scratch.
#1 – Why Do You Want to Buy?
It's a cliche at this point, but it's so important to ask yourself why you want to invest in commercial real estate. You need to sit down and map out your plan, preparing for detours and unexpected scenarios because, when these demoralizing surprises happen, holding onto your “why” will get you through them.
Benefits of Buying a Commercial Property for Sale Near You
Some of the less-discussed benefits of buying a commercial property for sale near you include:
- Knowledge of the local market: When you invest in local commercial properties, you're investing in a market you have the most exposure to and knowledge of. These will prove advantageous to you as you meet with sellers and discuss terms.
- Fixed-rate loans: Commercial real estate investors enjoy the peace of mind that comes with having fixed financing expenses each month because, when you buy, you can enjoy fixed-rate commercial investment property loans.
- Tax benefits: You can claim more deductions, like property taxes and mortgage interest, on commercial property when you own, resulting in more favorable capital gains treatment.
- Expansion potential: When business owners rent, they're at the mercy of the landlord; if their business takes off and they need to expand, they can't just do so, they have to have that conversation with their landlord. When you own, though, there is no landlord. You call the shots.
Hopefully, your own reasons for finding buildings for sale near you are more expansive and detailed than the above; these are just the icing on the cake, benefits that everyone who invests in commercial real estate can enjoy.
#2 – Explore Your Local Market's Prime Locations
As mentioned above, an advantage of buying commercial real estate that's near you is that it's likely to be in a CRE market of which you have previous knowledge. You've probably heard that location is key when searching for buildings for sale near you; this applies to both seasoned and new investors alike.
You may already know where everyone in your area goes to party, eat, shop, and relax, but it's still a good idea to do your research and due diligence. Examine the demographics of the market, decide what you think your tenants (should you have any) will be doing the most and look for locations that complement that, and consider working with a commercial real estate broker.
A broker differs from a real estate agent in that they have more experience, more schooling, and more intimate knowledge of your local CRE market and its trends. They'll help you navigate legalities, the competition, and reach favorable terms with sellers. Ultimately, they'll prove valuable to you in your search for buildings for sale near you.
#3 – Use a Free Listing Service to Find Buildings for Sale Near You
There are plenty of free resources available to you that you can use to search for buildings for sale near you, one of which is the MyEListing.com search engine.
For example, let's say you're looking for commercial property for sale near you in the Philadelphia area, specifically a multifamily housing unit. (For new CRE investors, a great place to start is multifamily housing with four units or fewer.) A quick search on MyEListing.com reveals a long list of multifamily property listings, their prices, and photos.
When you click on a property listing, you're presented with all kinds of crucial property information, including NOI, the lot size in acres, building square feet, CAP rate, and more.
You're also presented with the listing agent's contact information, more property listings from that agent, and more photos of the property.
As a new commercial real estate investor, saving as many dollars as you can at the start of your journey is important. You'll want to take advantage of as many free resources as you can to self-educate and find commercial property for sale near you first before hiring professional help.
#4 – Explore Financing Options
You may not be as fortunate as those who can afford to buy commercial real estate with cash, but that's OK. There's more than one way to skin a cat.
If you're planning to invest in a rental property, such as multifamily housing with five or more units, an office building, or a warehouse, that gives you rental income, you'll want to acquire an investment property loan; on the other hand, if you're looking for buildings for sale near you so you can give your own small business a much-needed home, you'll want to look into other types of conventional financing.
About Investment Property Loans
Notable characteristics of investment property loans include:
- Higher mortgage rates;
- Higher down payment amounts;
- Stricter lending standards;
- A six-month cash reserve for the property's mortgage; and
- Higher credit score minimums.
Again, make sure your investing “why” is really solid and that you consult with a professional before you take out your first investment property loan. The benefits of investing in commercial real estate, however, that offset these high lending standards include more reliable tenants, higher income potential, less turnover, and more tax breaks.
If you're planning to invest in a multifamily housing unit with four units or fewer and you're not planning on living in that property, you're better off taking out a conventional mortgage loan to finance it. A conventional mortgage loan will require a smaller down payment, a lower interest rate, and less strict lending standards than an investment property loan.
If you are planning on living in the rental property, you can take advantage of owner-occupant financing.
If you don't have the stomach to take on debt just yet for your CRE ventures, consider crowdfunding or real estate syndication platforms where no debt is required to invest in CRE.
List & Find Commercial Property for Sale Near You for Free with MyEListing.com!
Brokers and investors alike can find and list commercial property for sale for free right here on the MyEListing.com website. You can:
- Set up customized notifications;
- Receive email alerts;
- Access accurate market intelligence.
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