I am thinking about getting into real estate...I know there's more money in commercial but its harder to break into....any tips/ideas/suggestions?
Start where you can afford to purchase. Seek advise and guidance from a professional Realtor.
Are you asking about becoming a Realtor or getting into owning residential vs. commerical property?
There is one rule to remember in commercial real estate whether you are a buyer and holder, or someone who makes money on the management side: financial value is judged on what can be made going forward, not what it was in the past. The trick is to identify this potential and what can be done to build value going forward. The following drivers are important to consider when examining potential value in commercial real estate: 1. Location. Location. Location. Potential value will come from a high-traffic area with strong demographics, an area where new condos or subway line expansion are great examples. Being closer to transit or places easily accessed by walking is also attractive. 2. Revenue, cost and capitalization rate People sometimes forget the cost of upcoming vacancies. Is there a major tenant about to leave? Any zoning and developing issues/trends? What else is coming up in the area? All this impacts capitalization rates, an important measurement of risk, so avoid thinking of a property in isolation. For more tips visit: richardcrenian.ca/spotting-value-in-commercial-real-estate/ Richard Crenian
Commercial real estate usually involves a depth of understanding of these properties as the sale of an ongoing business, a site for a potential business, a possible business investment property, etc. That means you need a good solid familiarity with the concept of EGIs, GIMs, GRMs, NOIs, capitalization, depreciation, economic life, market and investment values, sales comparison, vacancy and collection losses, zoning and permitting and licensing - etc. - depending on what kind of commercial properties you are going to be working with. This is all great stuff, and a wonderful challenge, if you have the expertise. If your background includes this kind of experience (as an accountant, lawyer, banker, property manager, county or state employee - whatever) use your old contacts as a launching point in your marketing plan. People who know you already, professionally, will have some amount of faith in your abilities and can send you business - if you ask them to keep you in mind. If this is all new to you, you will need to build credibility. Take classes that pertain to this field (business, real estate, accounting - whatever you can find) and join the local commercial real estate associations. Build up your resume and network, network, network - and have a solid marketing plan to put your face out there. Ideally, you will find a mentor to help you along the way - perhaps in your local commercial real estate association? If this is your dream and your passion, and you are willing to set logical goals and work hard, you can do it. Good luck and best wishes.
