Guide to Buying Commercial Real Estate Investment Property
In Part 1, we were introduced to the strategy Joe Investor followed in his search for a commercial real estate investment property. The article also covered the challenges and obstacles he faced. Part 2 explored the parameters and reasons Joe had for working his deal.
In Part 3, we will look at the strategy Joe employs to find, check out and acquire the right property.
How Does Joe Go About Finding The Right Property?
Joe can try to find the property himself. However, he quickly realizes he is limited to properties he can find by driving around and calling off of signs or searching free websites and broker websites. Joe does not want to invest enormous amounts of time searching.
After calling a couple of brokers about specific properties and judging from the responses he has received, Joe realizes that, unlike the residential Multiple Listing Service (MLS), there is no single comprehensive system for searching for commercial property. There are numerous commercial databases. CoStar, LoopNet, Xceligent, The MLS Commercial, and Commercial Source are several examples of databases. To complicate matters, brokers may subscribe to one or two databases but generally don’t list properties for sale in each and every one of them.
In order to figure out whether the asking price is reasonable, Joe needs comparables. Some states are non-disclosure states, so finding true comparables may be very difficult.
Joe decides to employ his own broker to do this research, but first he has to figure out which broker to use. Should he use the broker who sold him his house? Should he use a commercial broker? Should he use a commercial broker with significant credentials, such as a Certified Commercial Investment Member (CCIM)? If Joe happens to be from another country, should he look for a broker who holds a Certified International Property Specialist (CIPS) designation?
Since investment property decisions are very heavily weighted towards financial implications and measurements, Joe would do well to select a CCIM. These brokers have the education and experience to assist in site selection, financial analysis and negotiation of the finer points of the acquisition. They typically have the research and access to critical information he needs, business partners (attorneys, title companies, accountants and inspectors) and other resources to help Joe every step of the way.
Image Courtesy of “Teamwork Concept” by cooldesign FreeDigitalPhotos.net
Texas Investment Property Group is a Commercial Real Estate Brokerage and Investment Company. Since 1991, the principals have created limited partnerships for over 65 successful investments, never once losing money for the investors and never once having a capital call. They invest their own money in every deal. All of the principals are Certified Commercial Investment Members (CCIM) and are hands-on property managers. Two of the principals have earned the Certified International Property Specialist designation (CIPS). For more information, please visit us at www.TexasIPG.com. The author would like to acknowledge the contributions of Wes Walters, CCIM, and V. Bruce Evans, CCIM.