Any real estate agent you would speak to about investing in a property would readily encourage you to do so with a commercial property compared to a residential real estate investment. Commercial property holders have great extra money coming in for them and they also enjoy the advantages of economies of scale.
They have such a great open playing field in the market and the great open market for great and cheap property managers as well. They get such a big payoff from their commercial dealings that residential real estate business does indeed pale a lot in value. This way you are bound to be convinced to put your investments into a commercial real estate instead. But you still would not know how to get the best commercial real estate GTA deal out there for you, and that is why you should go on reading this article.
Be as knowledgeable as the insiders
To be a good market player in the commercial real estate market, then you should start to think of one of the players in the game. First things first, you should know that the commercial property is placed on a different value compared to other types of property, like residential properties. These two markets are very different and they do not run in the same way for you to use the same cards and playing tricks. The money you would be making from a commercial real estate market is directly linked to its area of usage. But this is not the case when we are talking about residential markets.
You tend to see larger cash flows in and out in a commercial market compared to a residential real estate market. This is because you tend to earn more income due to the more families involved in the commercial area, compared to the single family you are working with in the residential sector. But at the same time, remember that the lease periods are longer in commercial real estate compared to a single family lease period in a residential market. This also helps you have a larger cash flow at one go.
Finally, if you are tight on your budget, then you should make sure before you enter the playing field, you have enough cash in hand. In the commercial market, property lenders tend to expect at least 30 percent of the entire property value because they give you a loan.
Have an action plan
You also need to make sure you mark down your own boundaries in your playing field. This is one important trait that you should always possess while playing in the commercial real estate market. You should be clear on how much you can afford to pay and how much you are expecting to get out of each deal. Think about who the important people in play are for each of the deal you make. Consider how many tenants are in the commercial space and are already paying their rents for you to hold this value as assurance while giving time to get the rest of the space get occupied.
Also, at this point think about the number of empty slots in the commercial space that has got to be filled and how you would be getting them filled with adequate advertising and publicity. All these factors play in and tie in well with the amount of money you have to put in and the money you are going to make out of it, so be careful with your choices.
Learn how to pick out a good deal
The really good players in the commercial real estate market know what a good deal is when they spot one. They don’t have a special secret for this but they do have some key skills you can learn. Firstly, they have something called the exit strategy. According to this strategy, the best deal is the one you know you can definitely take away with you. You also need to have a sharp eye and brain for details on looking out for property which has potential damage crying out loud for repair, and also to think about the risk of such repair costs when you are tabulating how much of profit you can make out of your sales.
Find people who are motivated to sell
Your job is sometimes easy. All you have to do is to find people who are eager and are rushing to sell you their property below the market value. Such sellers are the best fish to be caught in the sea because you then have no rush to sell it off to anyone else until the market value goes higher, or until you find someone who can give you the market price for the property. This way, you can easily make profits by making use of the luxury of time.