Investing in Commercial Real Estate
How to Invest in Commercial Real Estate
How do you know when you’re ready to invest in Commercial Real Estate? Here’s 3 of our top tips:
1. Nail down an idea.
Starting with strategy. What works for you? This is no different that starting a business or investing in a business. You need an idea. That idea is the genesis behind an investment strategy.
Some of things to consider:
- Location is crucial. You can never be too specific when it comes to real estate.
- Property Analysis. Examine the property’s functionality, design, and determine the value of previous improvements.
- What’s your RISK PROFILE? (this is evaluation of your willingness and ability to take risks)
2. Identify Your Team.
Before you start to put your money into the market start working with professionals who know your business plan and who will take care in supporting your interests. This team is made up of people who have the skills you don’t so that they can successfully support and lead you through the deal i.e. real estate agent, banker, attorney, contractors, etc.
3. Secure the Capital.
You don’t need as much capital as you think you need. Start with the CAPITAL STACK… this refers to the organization of all capital contributed to finance a real estate transaction or company. It defines who has the rights, and in what order, to the income and profits generated by the property through the hold period and upon sale.
The cash doesn’t need to come from just you. Usually it comes from a syndication or partnership. What your involvement is in the partnership will determine what amount of capital will be needed from you.
4. Know your Return.
What do you want to achieve by investing in industrial, commercial, multi-family, strip retail, etc?
Knowing what your end goal is can be key when deciding on what asset class to choose over another. For example, are you looking for a quick return? Long-term monthly income? Re-development opportunity? All these questions can help choose what’s best for you.
Need help navigating your next investment? Take advantage of our experience, knowledge, and expertise in the Commercial Real Estate market in Calgary. Text me at 403-200-4026.