Tips on How to Get Started
If you like to play Monopoly for fun, imagine how fun it would be to play Monopoly for real. For many real estate investors, scouting for a profitable commercial real estate property is very much like the board game. And to many, building wealth by investing in commercial real estate is often deemed the holy grail of investing. However, scouting and buying these types of properties is not as easy as 1-2-3, no matter what anyone tells you. But if you do your homework and surround yourself with people who can help you, you are well on your way to building a profitable commercial real estate portfolio! Below are three steps on how you can get started:
Step One: Educate Yourself
You can start by educating yourself. This includes reading books and publications, talking to experienced commercial real estate investors, attending classes and seminars, and joining a trade association. A really easy and inexpensive way to learn is to join a commercial real estate investor network. These networking groups connect you to not only the people you need to know (or should know) in the business, but also to educational tools and resources to help you become well versed in the practice.
Step Two: Surround Yourself With People Who Can Help You
Next, surround yourself with people who can help you build your portfolio. In order to be successful in commercial real estate investing, you must align yourself with a team of professionals who are “smarter” than you. These professionals include financing brokers, lenders, realtors, attorneys, contractors, property inspectors, market appraisers, title companies, accountants, engineers, and many other industry service providers. In building your team, make sure they know commercial real estate. For example, an attorney who is well versed in closing a residential deal may not know anything about closing a commercial deal.
Step Three: Know How A Commercial Property is Financed
The third step to getting started is to learn how a commercial property is financed. Many savvy residential real estate investors have a wake up call when they try to finance their first commercial property. Find out how commercial properties are financed before you even start scouting for one. The reason why this is so important is because commercial properties are not financed based on the purchase price, which is common in the residential industry. Commercial properties are financed by evaluating the cash flow of the property, which determines the ultimate value of the property, not the actual purchase/sales price. The difference between these two values could be the difference between a dead deal and a viable deal.
In summary, investing in commercial real estate can be a wonderful way to build wealth for entrepreneurs and investors alike. The more you immerse yourself in the field of commercial real estate and the more people you meet, the faster you can learn the tricks of the trade. Best of luck to you and may you always find success in your ventures.
Contributed by: Lauren Vo Zelakiewicz, CEO, VEC Financial Group
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© 2007 VEC Financial Group
The VEC Financial Group (VEC) is a privately-owned company dedicated to providing commercial mortgage and business financing to property owners and entrepreneurs across the country. VEC Financial provides these services by connecting the right broker with the right borrower, who ultimately finances with the right lender. This personalized system of matchmaking helps provide the best possible commercial financing experience. For more information on how to join VEC Financial Group as a client, Associate Broker, vendor, or lender please visit our website.