Investing in commercial property can result in huge profits, which is why many real estate investors prefer it to residential real estate investing. That said, commercial real estate investing usually costs a lot more and carries a bigger risk than many other investment strategies. Before you jump in with both feet, you must understand the pros and cons of this type of investing and the steps involved in the process. 

1. Build a Strong Team of Experts

Investing in commercial real estate can be complicated. You must surround yourself with a team of experts who know the ins and outs of this type of investment opportunity. From commercial realtors to commercial property managers, you’ll need the right people by your side if you want your investment to have the best chances for success. 

2. Know Your Investment Options

Commercial real estate encompasses a wide range of property types. Each one has specific pros and cons that make it perfect or not-so-ideal for you. Commercial properties include:

  • Office buildings
  • Apartment buildings
  • Malls and other retail properties
  • Warehouses
  • Industrial buildings 
  • Multi-use buildings

The takeaway here is that commercial real estate is used for business purposes. 

3. Financing

Before you begin searching for the perfect commercial property to buy, it’s best to secure financing first. This lets you know how much you can afford and under what terms you’ll be expected to repay the loan. It’s often more difficult securing financing for commercial property than residential property, so be prepared to have your business credit score and your personal credit score checked as part of the process. 

To ensure things go smoothly, you should check your credit scores before applying for financing. This allows you to fix any discrepancies and address any outstanding debt you may have forgotten about. 

4. Finding the Right Commercial Property

Now that you’ve partnered with the right experts, decided on the type of property you want to invest in, and figured out financing, it’s time to begin searching for the perfect commercial property to add to your portfolio. 

Your commercial realtor will help locate properties for you to choose from, but don’t be swayed by a good deal if it doesn’t fit your needs. For instance, don’t decide to buy a serviced office building because it looks good on paper if you’ve decided that you want to add an apartment building to your portfolio. 

5. Do Your Due Diligence

You can never have too much information about the property you want to buy. Your realtor can help you with this part, but don’t get lazy – do your due diligence and research the property before making an offer. 

Be sure to ask any questions you may have, including ones concerning the building’s prior uses, zoning laws, and how much rent the previous owner garnered. No question is a silly one as a bad investment in commercial property could be far more devastating than one in the residential market. 

6. Make an Offer

If all looks good, it’s time to make an offer. Your realtor can help you fill out the paperwork but be prepared to pay what’s called earnest money upfront. Earnest money is a guarantee of sorts that says you’re serious about buying the property. After you make an offer and the seller agrees, the process continues with inspections and more paperwork, ultimately culminating in the closing.

Many a millionaire has been made thanks to commercial real estate investing. However, it’s not for the faint of heart since its higher profits come with higher risk. To help your commercial investment be as successful as possible, follow the steps outlined above.