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Commercial real estate is a great investment. It’s also one of the least understood investments because it includes many different properties and business ventures, each with its own nuances.

The key to successful commercial real estate investing is knowing how to evaluate these nuances effectively, which means understanding the basics first.

1. Know Your Goals and Investment Strategy

There are several different reasons why people invest in commercial real estate. Many people start investing in hopes of using the income from their properties to supplement or even replace their full-time employment income.

Regardless of your investing goals, you have to know what strategy is best suited to achieve them. If your primary goal is to generate rental income, you will most likely be looking for an investment property that meets the needs of stable or growing businesses.

2. Create Your Business Plan

Your business plan should begin by identifying the type of real estate you’re looking for. The next step is to identify the particular market or area where you want to invest.

Your business plan will help you compare different areas of the city, state, or even country to find the location that gives you the best value for your money.

3. Buy Your Initial Property

Once you’ve decided on an area and a property type, your plan should lead you to locate and purchase your first property. Once you buy the first property, take the time to learn from your experience and correct any mistakes you made.

4. Repeat the Process and Evaluate Your Experience

With each new property you buy, your experience and knowledge of the industry will grow. As that happens, you need to evaluate your results with cold objectivity.

5. Build Your Portfolio

No matter your strategy for commercial real estate investing, the key to success is having a diversified portfolio of properties that allows you to spread out your risk as much as possible. When done correctly, every property will compensate for any mistakes or losses in another one of your projects.