Commercial Real Estate
A quick overview.
Your backyard or city is the best place to start. If your city is too expensive, then study a city that has the great potential.
Know your goal and budget. Start small. Maybe $2M. Gather the fund. Typical down payment is 30% or $600K. Ask friends and investors to join. Lower your risk. Wait for the good deal.
- Pick a location or city
- Study the market
- rents in each center
- compile a list of all the strip centers
- Centers for sale and sold in the last 12 months
- Use LoopNet and CoStar to review the data
- Analyze the data
- Good or bad deal? What are the risk?
- Market rent vs actual rent
- this determines if you buy at actual value or inflated value because of inflated market rent. Hence, it affects the outlook and decision-making based on NOI, CAP rate and purchase price.
- Brokers are your friend
- They can help you research
- They find deals and track new listings
- Move fast when the time comes
- Don’t try to save $20k when seller expects full price
- Due diligence
- DD is important. Here are some crucial parts
- Check the rent
- Order inspections
- Get the tenant estoppels
- Review all the expenses
- Review all the leases
- Environmental report
- DD is important. Here are some crucial parts
- Take care the property
- attract great tenants
- hire a property manager
- Repeat
Buy property that you can make value go up. Not because you think the value is going to go up.
