Commercial property can be a profitable area of investment and can be highly productive based on the tenants that lease your property. It’s a promising investment, but with nuances that you must consider before purchasing a property. As one of the premier commercial real estate brokers in Phoenix, we work with hundreds of clients to secure high-potential property investments. Here is what you need to know before you make a commercial real estate investment.
Hire a Commercial Real Estate Broker
Finding a place that suits your business needs is vital to your success. Whether you’re looking for something large to facilitate important machinery or something inviting to invigorate interest, real estate brokers can help with your search. They not only have many resources available to track the local market. Moreover, they may have insider knowledge about deals that haven’t yet made it to market.
Conducting research and looking at countless listings can take a tremendous amount of time away from your schedule. Hiring a commercial property broker can reduce the stress and time it takes to find the right property. They’ll do the heavy lifting and let you know when they find something worth looking into. This is invaluable to you as an entrepreneur as it allows you to focus on the other aspects of your business.
Securing the Right Location is Vital in Commercial Property Investment
One of the biggest things investors must consider is choosing the right location. Location is key, especially for retail, medical, multi-family, and mixed-use properties. By investing in commercial properties located in growth areas, you’ll likely attract a diverse range of tenants. Looking at local growth projections will help determine which areas have a high potential for safe investment.
Also, it’s important to note that different businesses require different types of locations. For instance: retailers and medical office spaces are interested in high foot and vehicle traffic. Industrial companies typically do not look for this. Instead, they put their focus on cost and availability, and other economic factors.
Learn how to Underwrite Commercial Property Investments
A valuable skill you should learn is how to underwrite commercial real estate investments. According to Tyler Cauble, you need your own formula that you can apply to any investment opportunity to determine if it’s the right fit for you. Many investors use some variation of Microsoft Excel to measure various items. Including:
- Purchase price
- Estimated rehab
- Projected rent
- Financing
The formula can be any metric that benefits your ROI. Another common measurement that is worth looking into is the price per square foot. You can compare the number to similar properties to determine if this is the best deal on the market. With this information, you can make educated decisions based on what you have found.
Close Your Commercial Real Estate Purchase
According to Fool.com, the first step to closing your purchase is to fund escrow. It’s made easier when partnering with an escrow agent to make sure all funds are there to properly close the transaction. In comparison with residential real estate, there are fewer regulations involved in commercial real estate, making it beneficial to hire a commercial lawyer. In doing so, the lawyer will be able to govern your transaction, ensuring everything is in order. Furthermore, you will be required to approve a title report and closing documents. A deed transfer and fund disbursement will follow, which will conclude the transaction.
When it comes to obtaining a commercial real estate loan, you need to consider many things. Such as:
- Understanding processing times
- Exploring all your loan options
- Having a plan for using the loan: understanding
- Reviewing your balance sheet
- Building a strong relationship with your lender
Plaza Companies is Arizona’s Premier Commercial Property Brokers
With almost 40 years of commercial real estate experience, Plaza Companies are investors’ go-to source for quality brokerage services. We work closely with clients looking to expand their portfolios and businesses searching for the perfect real estate for their operations. Whatever your needs may be, our team of professionals is dedicated to your needs. Contact us today to learn why we’re one of the best in the Valley.