Leveraging Commercial Real Estate Companies for Fast Portfolio Expansion
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.
Commercial real estate (CRE) isn’t really a conversation held around the water cooler, but it should be. After all, it’s one of the fastest-growing sectors of real estate. A lot of people believe that the path to passive income is a lot of houses and playing landlord for families and young professionals alike, but that isn’t the only way to get things done. Indeed, the potential for serious profit within the world of commercial real estate is high.
Worried that you missed the boat? Concerned that you won’t be able to find good CRE deals on your own? These are valid concerns, but here’s some good news: you haven’t missed the boat, and while you can do it on your own, it’s far better to get help from the beginning.
In an uncertain world, a partnership is the name of the game. Remember the last time you had a group project where every member of the team actually worked together? It’s like that, but this time profit is the goal, not just a top grade from your teacher.
The Perils of Investing Alone
Sure, entering the world of real estate investing alone is not only perfectly possible but something that people do every single day. They buy a property, get it going, then expand their portfolio one by one until they have several doors in the case of residential properties, or they get their first few pieces of commercial real estate.
Either way, the path is very tedious, because there are a lot of uncertainties. Are all deals created equal? Absolutely not. Do you know how much profit to expect? Perhaps you are an old hand at analyzing real estate deals, but it usually takes a little time in the game before this becomes second nature. This means the chances of making mistakes are much higher.
These mistakes do even out over time as you learn what to do and what not to do. But what if there was a way to avoid these pitfalls completely?
In other words, why go it alone when you can get help? Enter commercial real estate companies.
The Benefits of Commercial Real Estate Companies
Simply put, commercial real estate companies are focused on listing properties for sale and connecting buyers and sellers. As the buyer, there are more than a few benefits of commercial real estate companies:
- Quality. Listings are verified, and the CRE company will make sure that they’ve done some basic research.
- Speed. By providing a curated list, the company is saving you time.
- Effort. By having everything in one place, you’re saving time and therefore have more time to really hunt for the best deal.
The CRE companies hosting these listings have their reputation at stake with every transaction, so they do their best to provide listings that are quality. The goal is not just to provide a handful of listings, but for the company itself to earn your business over the entire course of your real estate investment journey.
After all, if you’re being taken care of, chances are extremely good that you’ll share the good news with others in your REI circle, and they will, in turn, share it with other people in their circle, so on and so forth.
Tips for Successful Partnerships
If you’re newer to the world of CRE and even just investing in general, the idea of collaborating with others might seem nerve-wracking. Even if someone is more successful, it’s important to remember that they were once a beginner. They just started before you did.
If you’re going to consider working with another real estate investor, here are a few tips to keep in mind while building a successful partnership:
- Define everyone’s role early. One of the hardest things about a partnership is figuring out who is going to do what. Get clear about that from the beginning -- including how much money everyone is expected to contribute.
- Discover everyone’s strengths. Everyone has a "superpower," but it’s up to you to find out what it is.
- Look for areas of opportunity. No one can know absolutely everything, so it’s important that you’re covering your future real estate investment partner, and they’re also covering you in return.
- Get everything in writing. Not having written agreements has landed plenty of former partners in legal hot water.
- Have your lawyer review all agreements. Your own lawyer looking out for your interests is always best. Don’t sign anything without reviewing it first.
There are plenty of great people waiting to work with you. A commercial real estate company can also connect you with other investors, thus improving your chances of a great partnership.
Other Considerations to Make for Maximum Success
Conflict resolution is important, especially as your real estate team begins to grow. The more that you can iron out conflicts before they grow into full-fledged issues is incredibly important. The other person isn’t going to agree with everything you want to do, and you probably aren’t going to agree with everything they wish to do in terms of investments.
Sometimes, working out a disagreement is a matter of getting away from the problem for a few days and then coming back together to see if a compromise is the order of the day. There may be conflicts that require a third party to step in and make recommendations.
This is why a written agreement that covers major disputes is incredibly important, as it protects all parties involved.
While you’re thinking about what you want your partnership to look like, it’s important to also understand what your exit strategy will look like for each deal. For example, if the two of you decide to pick up a small multi-family complex, are you in agreement on how long to keep it? Do you want to hold on to it, or flip it to another investor? Talk these things out with your partner before you make any decision.
Build Your Network with CRE Companies
As you can see, working with commercial real estate companies opens doors for faster portfolio expansion. It can also connect you to other real estate investors that can build partnerships with you and expand your real estate holdings to new heights. While solo investing is a real thing, you may find that building partnerships and working with others helps you reach your real estate investment goals sooner than expected.
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