Commercial Property, Once you have given some serious thought to the kind of commercial properties you want to invest in, it’s time to go out and find them. And to be successful in this endeavor, you will need some help. Most commercial properties do not sport “For Sale” signs as single family residences might, and they are not advertised in multiple listing services where just about anyone can spot them. Searching for the right real estate requires some insider resources.
Using Brokers and Agents
Once you’re ready to purchase commercial real estate, you’ll want to get acquainted with commercial brokers and agents who will work with you. The advantage of establishing these relationships early in your career is that you will have a direct link to the part of the market that is mostly hidden from the public… and you have someone who is more knowledgeable than you about the commercial market and how it operates in your area.
A commercial agent can find deals before they are widely advertised. In some cases, they might be able to connect you with a property that isn’t advertised at all. This is more common once you have a proven track record of acquiring properties, but you might also get lucky as a beginner now and then. The agent may know an owner who will sell under certain conditions, and if you meet those conditions, you may get a deal.They may also provide you with help finding tenants.
Finding a good, knowledgeable broker who will work patiently with a beginner investor is not the easiest search in the world. But if you are truly ready to make an offer, with enough capital on hand and the right attitude to move quickly on a property that meets all your requirements and expectations, you will get the respect you deserve from an experienced professional.
Using Online Property Listings
But what if you just want to look around and survey what is available and aren’t ready to commit quite yet? In that case, you can do quite a bit of looking on your own. The internet has made that an easy task. You can now browse properties on the market and do your own investigations, getting acquainted with what’s available in your chosen market, which gives you a bit of independent education that is also pretty effortless.
Commercial brokerage websites allow you to browse listings for free and get quite a bit of information, such as location, price, vacancy rate, price per square foot, total square footage, major tenants, and a photo. Sometimes you can download a marketing brochure which may contain a list of tenants and a rudimentary income statement… all of which you can use to do some financial projections of your own. You can then drive by these properties and do as much hands-on research as you can.
Another option is LoopNet, the most popular and well-known online listing service for commercial real estate. Here you can do endless searches using any number of criteria, such as price range, size, location and type of property. You can compare property prices by location and square footage, see small photos, get contact information of the listing agent and download brochures in PDF format. These basic searches are free when you sign up using an email and password.
You can get more information with a monthly subscription to LoopNet, which offers several different pricing options. Logically, the more you pay, the more you have access to. It is certainly a great advantage to have a subscription, but it could get expensive for some beginners. It’s important to avoid purchasing more access than you need. For example, you will not require the ability to post your own listings.
Using Public Records to Search for Properties
Some savvy investors will conduct their own sleuthing using public records. This too may involve both a free and non-free version. You can take a trip to the county recorder or tax assessor offices, or you may be lucky and discover that your county offers ownership information online for no charge. In cases where you cannot search online and going to the office is not possible, a title company can pull records for you for a fee. This is usually not terribly expensive but can add up if you want to view multiple properties.
If your strategy involves finding out as much about a particular property as you can before you think about making an offer, or if you wish to find distressed properties that have fallen behind on taxes, public record searches may be a good tactic. If you wish to contact owners directly and make offers, you will need to get their contact information somehow, and a search of public records will help, whether it’s a do-it-yourself project, or fee-based.
Using the “Grapevine” Method
Now and then a beginner investor will have some contacts in strategic places. Obviously you must adhere to all ethical guidelines regarding the release of confidential information, but there are plenty of circumstances where this is not a problem and you are simply taking advantage of a “grapevine” of harmless business gossip.
It is always advantageous to a keep abreast of what’s going on in your community and there is no better way to do it than inviting a friend or acquaintance for lunch and finding out if there is anything new “out there” in the industry. Someone may know, for example, that a particular owner of a particular property has lost a key tenant and is now looking for a buyer, having no patience for long-term tenant searches… or is perhaps in the midst of a divorce or bankruptcy (all of which is public information) and needs to unload a property quickly and quietly.
Using all the methods of searching at your disposal is a good idea. But nothing should replace the old-fashioned, low-tech method of “driving around” your chosen area, looking around, taking notes, talking to people, and just generally being open and alert to what is going on around you. Curiosity combined with patience is a great attitude for a beginning investor to cultivate. Being careful to subdue the “get-rich-quick” mentality is a great advantage. Knowledge is power and uncontrolled greed is usually the biggest obstacle to the calm, careful, objective searching and evaluation that is so necessary to long-term success in commercial real estate.