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How to Begin Investing in Commercial Real Estate

It’s wise to have your money invested across a variety of assets. Commercial real estate is an excellent option. Where else can you find an investment that includes cash flow? Equity paydown? Both options mean your money is working for you. Asset appreciation and tax depreciation are also HUGE benefits, and many buyers/investors are seeing cost segregation (accelerated depreciation) opportunities.

 

Pink pig wearing sunglasses on a building roof, against a blue sky with clouds. Brick building and metal beams in the foreground.

When you read that, you might think of pulling up a confused GIF on your smart phone. Well, let me help. Here are my five tips to begin investing in commercial real estate:

 

1.      Do your research. Listen to podcasts, read books, and talk to investors. Be sure to asks questions and most importantly listen. Learn how to read contracts and gain an understanding of your local economy. Brokers can help, as we’re experts in the business.

2.     Decide what property type best suits your interest and budget. Categories and examples include:

 

  • Industrial: Manufacturing, light assembly, warehouses, flex warehouses (includes office), distribution centers, and storage facilities

  • ·Retail: Small shops, strip malls, power centers, community retail centers and large shopping complexes

  • Office: Buildings vary from a single tenant office to office centers and skyscrapers –– grouped by Class A, B, and C (ranging from best construction, amenities, and location)

  • Hospitality: Hotels and motels

  • Multifamily: Duplex, triplex, quadruplex, and apartment buildings

  • Mixed Use: Combination of any of the previous categories

  • Land: Undeveloped land, infill (could be vacant land or underdeveloped), and brownfield (previously used for commercial or industrial, but can be cleaned up and re-used)

  • Special Purpose: Parking lots/ramps, stadiums, outdoor storage, etc.

 

3.     Find a mentor or join a commercial real estate investing group. Look within your community and talk to people you know. Someone may know someone. Otherwise, intentionally connect with people that work in CRE.

4.    Build a network of specialists. You’ll need to rely on the expertise of brokers, bankers, lawyers, and accountants. Find people you can trust and those who know the local CRE business.

5.     Smaller deals are often seeds to get into bigger deals. Starting small gives you the opportunity to gain experience without taking catastrophic risk.

 


Pink piggy bank with sunglasses on a path, with a blue "GO" sign. Cloudy sky and trees in the background. Playful and whimsical mood.

Commercial real estate investing doesn’t have to be a confusing, scary, or intimidating move. You also don’t need to have enormous amounts of cash to begin. You do need to know the risks and benefits, so find the right connections, do your research, and determine which deal fits your goals and lifestyle.

 

Conclusion

 

Investing in commercial real estate offers benefits like cash flow, equity paydown, appreciation, and tax advantages. To get started, research thoroughly through books, podcasts, and conversations with investors; choose a property type that fits your budget and interests (e.g., industrial, retail, office, multifamily); find a mentor or join an investing group; build a trusted network of professionals like brokers and lawyers; and start with smaller deals to gain experience with less risk.



Smiling man with glasses and short gray hair, wearing a blue striped suit and checkered shirt, outdoors with greenery in the background.

Jeff Salzbrun is the owner/broker of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in thousands of sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.

 

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