The commercial real estate industry is growing, and new investors are finding opportunities to grow their wealth part-time, or as a full-time career. Since everyone needs a place to start, here are some essential tips on making your life as a commercial real estate investor a success.
1. How will you generate revenue?
No one jumps into commercial real estate by taking on a large construction project. Most new commercial real estate investors generate revenue by either selling properties or renting them to tenants. Some start off by purchasing a property and converting it into a single family rental or a duplex. Others get their start in commercial real estate by flipping properties. Keep in mind that you can always sell a rental property if the market is right, or rent a property you planned on flipping if the market takes a downturn. Having contingency plans can help you to generate revenue regardless of market conditions.
2. Diversifying is not a short-term strategy
Many new commercial real estate investors have dreams of building a portfolio with residential rentals, commercial space for businesses, and other revenue-generating properties. While this is a good long-term strategy, the learning curve is pretty steep. Start off with one type of property until you get a handle on the requirements, maintenance, tax guidelines, and other factors before diversifying your portfolio. Remember that a simple fix and flip project is much different than a large apartment complex or an industrial property.
3. Keep maintenance and management costs low at first
Not all properties require constant upkeep. If your niche is renting properties instead of selling them, then property management is a must. An owner-occupied property will allow you to keep an eye on maintenance and repairs, but if you are growing your portfolio, you may want to hire people to take care of your properties and keep an eye on tenants. As you acquire more properties, you may want to hire a professional property management team to handle rent, repairs, screening tenants, and more.
4. Find financing that fits your needs
Just as no two properties are alike, there is no such thing as a “one size fits all” loan. Golden Century Lending provides a wide range of options for commercial real estate investors at all levels. From conventional financing and CMBS loans to fix and flip lines of credit and more, our team will create a customized solution to fit your needs. Contact our offices to learn more.