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6 Steps to Find Your Next Commercial Property

Published: 03-29-22 Category: Investing

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.

Not so fast, metaverse: there are still plenty of real-world opportunities that it’s not time to go all-digital just yet. While some are staking their fortunes on NFTs, metaverse lore, and combating crypto hacks, there are still plenty of opportunities to find your next commercial property.

Indeed, there are six steps to finding the next commercial property, whether it’s your 1st or your 20th. Of course, the deeper you go into CRE, the more you’ll hone your own strategies.

But perhaps the tips below may give you a little extra food for thought.

Building Your Dream Property

When it comes to finding the best commercial property, a little dream building is in order. While this sounds like an unnecessary task, it has a few benefits:

It helps you narrow things down as you hunt through the free commercial real estate listings.
It filters out what won’t work with your strategic plans for the property, which in turn saves a lot of money.
The brainstorming phase is key if you’re looking for your next property as part of a joint venture because it gives time for all stakeholders to give important input about the project.
Building the dream property in mind also makes it clear how much the team is willing to spend to acquire the next property.

Since it’s very easy to let emotions get in the way of logic, the dream building/brainstorming phase is a great way to get concrete about what the next property will do for the portfolio. Don’t fall into the trap of thinking any deal will do the job.

#1 – Tap Your Network

Off-market deals can bring in huge opportunities. For starters, it’s way less competition rather than picking something out of a database that thousands of real estate people have already seen and picked over.

An off-market deal also can open the doors to better negotiation, which may mean a lower price than an on-market property would bring.

While negotiation is about building a win-win deal for both parties, the presence of distressed properties and motivated sellers is something that can’t be overlooked either.

In a way, motivated sellers need discounted deals to get away from properties that are most likely draining their resources.

Set them free and reap the rewards of taking on a higher level of risk. While you will most likely have to put more money into a distressed property, it can often help you open up new opportunities that might not exist in the same way with a more improved building.

After all, someone has to pay for those improvements.

#2 – Find a Broker

Trying to do the entire hunt for the next commercial property is like trying to dig through a lot of hay for a special kind of needle.

Remember that CRE is a big industry, with a lot of different types of properties to choose from. Are you looking for multifamily? A storage facility? What about a warehouse? Perhaps a data center building is more up to speed?

No matter what the asset type within CRE, a broker can help you navigate through the listings, get more information, and, most importantly, make the best offers possible.

Bonus points here if you already have a great broker, because there’s nothing better than continuing to do deals with people that you already know, like, and trust.

#3 – Check It Out in Person

While investing out of state often means not being able to see the property in person, the reality is that most people are hunting for the next commercial building in their backyard.

This means that it just makes sense to try to check out the property in person. Buying sight unseen just doesn’t make sense.

Check out the property on Instant Street View, but then you can go ahead and set up a time to view the property.

Take plenty of photos and videos, even if the property’s listing has plenty of photos. You want to be able to visualize how the space will be used, and your own photos are good for that.

#4 – Make an Offer

Here’s where the rubber meets the proverbial road: you need to make an offer. Bring in your broker for this because a seasoned CRE broker can build a battle plan for success.

The sweet spot, naturally, is an offer that doesn’t bleed you dry but also an offer that doesn’t make the seller feel like they’re being taken for a ride.

Your broker should be able to do enough comparative research to help you build an offer that makes sense. For example, is the building in good shape, or will it need a little more TLC than meets the eye?

#5 – Handle Legal and Other Due Diligence

The offer phase is only the beginning: once the offer is out of the way, it’s time to conduct even more due diligence, paperwork, and conversations. Indeed, you’ll need to schedule an inspection to have someone look at the property.

All of the pretty brochures and fact sheets can’t change the fact that you’ll need to have the property examined by a professional.

Financing also is part of the conversation: do you have that lender on speed dial yet? That’s a bit tongue in cheek, but having an idea of where you’ll go for financing is also important.

#6 – Make Your Commercial Property Mission Take Flight

All of the advice in the world pales in comparison to taking action on the mission. So take the tips in this guide and start reaching out to the broker of your choice.

If you don’t know any brokers in your area, there are plenty of real estate groups that can steer you in the right direction.

Once you have a broker on your side, you can start building and refining that game plan. If you already know that you have your down payment and lender network in place, then you’re even closer to making this commercial property project a reality.

Don’t give in to emotion; the right commercial property is closer than you think, but it’s critical to ensure that the numbers make sense.

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