Commercial real estate is an industry that is undoubtedly booming — a fact that is made even more remarkable by the fact that a few years ago, real estate seemed to have an uncertain future. If you’re wondering about how to buy commercial real estate, or for that matter how to get into the industry in the first place, you’re not alone. Furthermore, you shouldn’t feel as if you have to have a deep history in real estate investing to become involved in the industry. What you will need, however, is a lot of advance research and at the very least an experience mentor to help guide you through the real estate investment field. While there is much to gain through buying and selling commercial real estate, there are also risks at stake. However, if you do the right amount of preparation and make wise choices, there isn’t any reason why you shouldn’t be successful. As all real estate investment firms will tell you, this is a high risk and high reward field. It requires a lot of capital, and certainly a good amount of bravery, as is the case with most investment industries. Let’s look into what the outlook is for commercial real estate industry, and how to buy commercial real estate.
Investing In Commercial Real Estate: The Outlook
Before getting into this industry, you’ll obviously want to know that you have a chance at success. While no one is guaranteed success in any one field, the prospects for this one are particularly promising at the moment. It should be said that the commercial real estate market tends to fluctuate every five to seven years. With that being said, it’s seeing a high point at the moment. As of June 2014, the global property investment market had grown by $788 billion. When it comes to where the market has been the most successful, big cities are always the standouts. With 7% of the market share, New York City is the number one city for global property investment. Be prepared to live in a major city if you want to be involved in this industry.
How To Buy Commercial Real Estate: Getting Started
There is a lot of money at stake when it comes to buying and selling commercial real estate. Many have found that they can make a lifelong career in this field. With that being said, those getting started should find a mentor or if possible join a firm rather than starting out independently. This is due to the fact that, as previously mentioned, real estate investment requires a lot of capital that many beginners may not necessarily have or be able to get. A mentor can guide you in earning how to buy commercial real estate. They may also have valuable connections, which can really make or break your success in this kind of specialized field. One of the most important things to remember when investing in commercial real estate is the reality of your likely need for a bank loan. Few are able to invest in any kind of real estate without some kind of loan. Even prior to getting a loan, you should have a good amount of savings prepared — in part because banks typically only loan 60 to 70% of a property’s value. Furthermore, commercial property lenders often prefer to see at least 30% down before giving the loan approval.
The Return: What To Aim For
The fact is that there is much to expect out of the commercial real estate industry — but be patient. No one is an instant success. If you do want to be successful in the long term, there are certain investment return numbers to expect and aim for. Usually, commercial properties have an annual return rate off the purchase price between six and 12%, depending on the area. Buying and selling real estate will take a lot of hard work and dedication; but the rewards can be great.
