Have you thought about jumping into the real estate market? With historically low-interest rates, this could be the best time to start.
You could be on the way to owning a piece of property that will produce a generous income for you.
All you need is a helpful guide to figure out how to buy commercial properties.
Learn the Lingo
If you’re new to the commercial real estate industry, you’re going to have to spend some time learning the vocabulary and processes.
Some of the terms are similar to residential real estate, but you will need to research until you feel comfortable and make transactions easy for others.
Here are some terms to get familiar with:
- Vacancy rate – the percentage of vacant units in a property
- Loan-to-value (LTV) – the amount of the loan vs. the value of the property
- Ad Valorem – tax founded on the value of property
The more knowledgeable you become with the vocabulary, the more likely people will want to do business with you.
Consult With the Experts
Buying commercial properties can be a complicated endeavor for even the most veteran gurus. You should surround yourself with a team of experts.
To complete a commercial purchase, you will need a commercial realtor, mortgage lender, real estate lawyer, and an accountant.
For buildings or properties that have special designations or requirements, you may also need to hire healthcare real estate advisors, environment experts, or specialty lawyers.
Surround yourself with a team of people who know more than you and can make your first transaction a smooth one.
How to Buy Commercial Properties With Financing
Unless you’re sitting on a mountain of cash, you’ll need some help with financing your first commercial real estate deal.
If you’ve never done a commercial property purchase through your bank or credit union before, they may not give you the loan to buy.
Consider alternative methods such as seller financing, leasing options, or second mortgages to help you get your property.
Don’t believe that you have to get money from a traditional lending institution.
As you approach the closing, make sure a neutral third-party escrow officer is handling the transaction.
The escrow officer will process all paperwork including the deeds, financing, bill of sale, receipts, contracts, and warranties.
This is also the time for you to perform due diligence before the sale is completed.
Triple check that everything the seller has said is true. You should review environmental impact studies, restrictions, contracts, special agreements, and the condition of your property.
If something is contrary to what’s stated, let the escrow officer know so they can stop the transfer.
Join the Market
This is the perfect time to join the market and buy a building or real estate. You can acquire assets with low interest to help boost your portfolio.
Understanding how to buy commercial properties is the first step to securing a prosperous financial future.
If you want to learn more about game-changing topics, keep scrolling for more articles.