How to Buy Commercial Real Estate

There are over 6.9 million people currently living in Houston, Texas, making it a great place for property investors to focus their attention.

If you’ve never invested in commercial real estate before, but you want to begin, this article will tell you how.

Define Your Motivations for Investing

Before you can start thinking about buying commercial real estate , you have to ask yourself why you want to do so in the first place.

If you don’t already know what you’re trying to accomplish, there won’t be any point in investing in property. Instead of buying first and deciding what to do with it later, figure out what you want to do before you start. Identify your “why.”

Once you’ve decided what you desire to accomplish, you can start searching for investment opportunities that will help you reach that goal.

Consider All Your Options

Commercial real estate is a fairly broad term -- it can apply to office buildings, industrial complexes, retail stores, and more.

Basically, commercial real estate is property that’s only used for business purposes. But before you go any further, you’ve got to define exactly what type of commercial property you want to invest in. Knowing your “why” will help you with this step.

Get Funding

You should try to secure financing before you start to look for commercial real estate property to purchase. Not only will you know ahead of time exactly what you can afford, but you’ll be able to facilitate deals faster by having the money “in hand.”

Get With the Right People

From luxury real estate to first time home buyers to commercial Realtors, real estate is first and foremost a people business. Therefore, it’s important that you align your services with all of the right professional people to make your dream happen.

You will want a commercial real estate agent who specializes in the sort of transactions you hope to make. You’ll probably need a competent real estate lawyer, who is well-versed in laws governing commercial real estate. You may even want a certified personal accountant to ensure that the deal turns out according to your plans.

There are lots of professionals who can be very helpful throughout the stressful task of investing in commercial real estate. Don’t be afraid to ask for their help. The right partners are often the key to unlocking your dreams.

Find the Right Property

With the above preparation complete, it’s finally time to start looking for properties to invest in.

By now, you’ll know exactly what criteria you’re looking for in the perfect commercial property. Don’t stray too far away from this vision -- the plan is in place to keep you on track, so you really do end up with the result you’re after. There’s absolutely no reason for you to buy a property that won’t help you realize your goal, regardless of how good of a deal it seems to be.

Do Your Due Diligence

Buying commercial real estate is very little like buying a home. Before you proceed with a sale, make sure you do your due diligence. Analyze every deal, run the numbers, and make sure that any risks involved in purchasing a property are well worth the possible rewards. Analyze each detail, and don’t settle for less than what you know you need to actualize your dream. Only agree to move forward with a deal when you know it’s going to benefit your portfolio.

Lastly, Close the Deal

When you find a property that meets your criteria and seems worth investing in, make an offer with a contingency clause. Specifically, make an offer that includes an inspection contingency -- that way you can still back out of the deal if the property doesn’t pass inspection.

If everything looks clear and above-board, don’t relax just yet. Continue to be on your guard and to do your due diligence in research and analysis.

When you finally enter a transaction, make sure you have the right insurance set up and that you’ve reviewed all important documents included in the transaction. Making a commercial real estate transaction is complicated and messy, so you need to be prepared.

While this isn’t a comprehensive list of everything that goes into buying commercial real estate, it will give you an overview of what’s involved and what to expect.