Buying your first piece of commercial land can seem pretty intimidating. There's a lot that you need to learn before you can make a smart decision. But this list of five tips for making your first commercial real estate purchase can get you started in the right direction.
Get Honest with Yourself
The first thing you should do before buying a piece of commercial real estate is get honest with yourself about your goals, expectations, and willingness to commit. Do you want this to be a full-time enterprise? Is the goal to transition from your current job to one with more flexibility? How much time and energy are you realistically looking to commit to this project? Or maybe you're just looking to buy a piece of commercial real estate for your own business, and that's fine too!
Consider Building Management
Are you willing to be the landlord of this property? That means collecting rent, paying utilities, and resolving the complaints of your tenants. If you don't plan on serving in this role, then you'll have to look into the cost of building management services in your area and factor this cost into your budget for the purchase.
Look for a Partner
Between financing the purchase and possibly managing the property, investing in commercial real estate could be a big commitment. If you're looking for someone to share the financial and managerial burdens, finding a partner could be a great option. And if you're new to the game, a more experienced partner can help you get clear on your goals and make smart investments.
Learn the Language
Pretty soon you'll be throwing acronyms around like a pro, but when you first start out, the real estate language can be a little confusing. Study up on terms like Loan-to-Value (LTV), Net Operating Income (NOI), and Cap Rate. Knowing some of the basic language will help you hop on board more quickly and be taken seriously by experts. At the same time, know the specific challenges that come with commercial land. Get advice from a land surveyor, an excavation team, and a commercial builder to understand what will go into developing your land.
Find the Right Realtor
This is especially important if you're taking on a commercial real estate investment alone. A seasoned real estate professional can help you understand the sometimes complex language surrounding commercial real estate. With their experience in your area, they can also help you to foresee trends in the marketplace and blossoming neighborhoods.
Once you've covered these tips, you should be well on your way to realizing your real estate goals. Reach out to contracting companies like Sovereign Excavation & Construction Solutions to get started.