So, you’ve been thinking about diving into the world of commercial real estate investing. It’s easy to see the appeal—passive income, the potential for long-term wealth, and the chance to be part of something bigger than just a paycheck. But how do you get started?
Start With Education: Take a Commercial Real Estate Investment Course
The first step? Education, education, education! There’s no getting around it—commercial real estate is complex. But don’t worry, you don’t need to spend years hitting the books. A well-structured commercial real estate investment course can fast-track your understanding. Look for courses that offer a 30-day or less intensive learning experience. These can give you the foundation you need without dragging on for months.
These shorter courses often focus on the essentials, like:
- Commercial property types – Office buildings, retail spaces, industrial properties, etc.
- Financing basics – Understanding how CRE financing works, from traditional loans to newer options like crowdfunding.
- Investment strategies – The difference between flipping commercial properties, leasing, or holding onto them long-term.
Investing a month of your time in a course can save you from making rookie mistakes and give you the confidence to start moving forward. Plus, you’ll get familiar with common industry terms like cap rates, NOI (net operating income), and IRR (internal rate of return), which are critical when analyzing potential investments.
Research the Market: Know Where You Want to Invest
Once you’ve gotten your education down, it’s time to dive into the market research. Commercial real estate varies greatly depending on the location, so where you invest matters—a lot. The market in a bustling city will differ drastically from that of a smaller town or suburb. So, how do you choose?
Local familiarity
If you’re new to commercial real estate, start with markets you know. It’s easier to research areas where you live or have connections.
Market growth potential
Look for areas with positive growth indicators: job growth, population increases, and infrastructure developments.
Property demand
Understand the demand for different property types in the area. For example, some cities may have a surplus of office spaces but a shortage of industrial warehouses. Others might be prime for retail growth.
Build a Solid Network: Surround Yourself with Industry Experts
Real estate, especially commercial, is not something you should try to tackle alone. You’ll need a team of professionals around you to guide you through the process. Start networking early and surround yourself with people who know the ropes.
Who should be on your radar?
- Commercial real estate agents – They know the market and can help you find deals.
- Attorneys specializing in real estate – To help navigate the legal landscape.
- Accountants – To help you understand tax implications and keep your finances in order.
- Lenders – They can explain your financing options and make sure you get the best possible deal.
- Property managers – If you’re not planning on managing the property yourself, you’ll want someone who knows how to keep things running smoothly.
Start building these relationships as early as possible. Attend real estate investment meetups, seminars, or even virtual webinars to connect with professionals who can become part of your team.
Choose Your Investment Strategy: Pick a Path That Suits You
Now, it’s decision time. What kind of commercial real estate investor do you want to be? The beauty of CRE investing is that there are so many ways to approach it. But you have to pick a strategy that aligns with your goals, risk tolerance, and available time.
A few popular strategies include:
- Value-Add Properties – These are properties that need a little TLC. You purchase them at a lower price, make improvements, and then either flip them or rent them out at a higher rate.
- Buy and Hold – Purchase a property and hold onto it long-term, collecting rent and benefiting from appreciation.
- REITs (Real Estate Investment Trusts) – Want to be hands-off? Investing in a REIT lets you buy shares in commercial real estate portfolios managed by professionals. You get to participate in the CRE market without the day-to-day management.
Consider your goals. Are you looking for steady cash flow, or are you more interested in long-term wealth building? Your investment strategy will guide the type of properties you purchase and how you manage them.
Understand Financing Options: Find the Right Way to Fund Your Investment
Commercial real estate financing can be more complicated than residential, but there are plenty of options to explore. Traditional bank loans are common, but they aren’t your only choice.
SBA loans
The Small Business Administration offers loans specifically for real estate used by small businesses, which can be a great option if you plan to use the property yourself.
Crowdfunding
Platforms exist that allow you to pool your money with other investors to purchase commercial properties.
Private lenders
These can provide more flexible financing options, but often at higher interest rates.
Make sure to shop around for the best financing option for your specific situation, and don’t forget to factor in additional costs like property management, maintenance, and vacancies when calculating your potential returns.
Take the Leap: Make Your First Investment
The final step? Take action! You’ve got your education, you’ve researched your market, built a network, chosen a strategy, and found financing. Now it’s time to make your first investment. Start small if you need to—maybe a multi-family property or a small office building—but start. The longer you wait, the more opportunities you’ll miss.
