Investing in commercial real estate can be both lucrative and rewarding. This ultimate guide demystifies the process, connecting you with all the latest information, advice, and market trends for today’s top real estate investors. Learn about financing options and more to get started on your own commercial real estate journey.

Understand the Market.

Before diving into any commercial real estate investment, it’s important to understand the current market. Make sure to research trends in the industry and look at data on recent sales to get a better picture of what is happening. Knowing what’s already happened in the market can help you make more informed decisions about when and where to invest. Additionally, having knowledge of local zoning laws and regulations can also benefit your investments.

Analyze Local Markets and Trends.

Before investing, it’s important to understand the local market trends and how those could potentially impact your investment. Take a look at popular business areas in the city as well as economic data on job growth, population growth, housing prices and other demographic information. All of this information can help you better predict the viability of your commercial real estate investments. Additionally, consider speaking with local real estate agents or other industry professionals for their perspectives on the area.

Identify Potential Opportunities.

Do your research to identify potential commercial real estate investing opportunities that fit with your financial objectives. Look for properties that meet certain criteria, such as income producing assets, reliable tenants, and attractive local demographics. Additionally consider factors like the location of the property and its habitability—the more attractive amenities such as parking or easy access to public transportation will likely draw in more tenants. Finally, pay close attention to the current market availability and pricing, including any tax benefits or incentives.

Research Types of Investment Property Deals.

As you research potential deals, familiarize yourself with the different types of commercial real estate investments. For example, a net lease is when a tenant pays the landlord base rent plus additional costs that cover taxes, insurance, and maintenance expenses. A triple net (NNN) investment means the tenant is responsible for all three of those costs. With ground leases, tenants lease land from an owner or investor to build their own buildings on the property. Finally, sale-and-leaseback arrangements enable companies to sell their existing assets​ then lease them back under a long-term agreement typically with an option to buy it back at some point in the future.​

Review Financial Risk vs Reward Measurements.

As with any type of investment strategy, researching the financial risk vs reward measurements can help to determine if a commercial real estate investment is worth pursuing. Review potential deals to understand what kinds of returns are projected and decide whether or not those make sense for your overall strategy. For example, a higher return may mean that there is more risk involved and/or a longer commitment period. Conversely, lower returns could also signify a more stable financial venture with less volatility. Be sure to review the qualitative aspects of each deal as well in order to make an informed decision.