Advice for New Commercial Estate Investors

Commercial mortgage rates

Commercial real estate financing is an exciting market to burst into. This year, the economy ideally will deliver its strongest year of growth since 2008’s financial crisis. The labor market is finally looking healthy, and corporate expenditures are finally gaining steam. The National Association of Realtors also predicts a sunny forecast, saying while the global economy may be slowing down, the US’s economic momentum should keep 2015’s real estate on much firmer ground.

There are some common questions people have when investing in commercial real estate. What IS commercial real estate? Why bother to invest in commercial real estate at all? How do you know if you are getting a good investment?

Commercial real estate simply refers to properties such as retail buildings, industrial buildings, apartments, or mixed use buildings. Why investment in these kinds of properties? They have great income potential, limited hours of operation so you can manage that work life balance, offer more flexible leasing terms, and the price evaluations are much more objective.

Commercial real estate financing comes in many forms, from hard money loans, to Commercial Mortgage Backed Security Loans (CMBS), project financing, to Mezzanine Financing (Subordinated Debt Financing), to name a few. Other numbers such as commercial mortgage rate and commercial mortgage loans also present challenges for the uninitiated in commercial real estate. That’s a lot of alphabet soup, but knowing, understanding, and internalizing this and other commercial real estate vocabulary is crucial to being successful.

Asking a mortgage broker about the numbers and how they work is also another key component of successful business. Commercial real estate financing can be confusing, but asking a good mortgage broker about the particulars is always a solid option. Don’t be afraid to ask around either though. I

f you find a property you absolutely must have, you should find a commercial loan broker and real estate agent, who can work with you to find financing, what your options are, and potential costs.

Commercial real estate financing is a big undertaking, so be willing to take the time to learn about it fully. You may love or hate it, but knowing that is hugely important. The most successful individuals in commercial real estate are those who are willing to commit to learning and doing. Getting good commercial real estate financing is also process, and it can take as long as you need it to. Remember, though, for most people it won’t happen easily or suddenly. Being patient, understanding, and persistent is the majority of the battle.
Good luck!

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