Apart from knowledge of the business, one of the most important prerequisites for success in commercial real estate is having the patience and motivation to do a lot of research, and to be constantly networking with other professionals. In other words, the right attitudes are important before you even begin to conduct operations as a commercial estate investor.
Take your time
Everything about commercial real estate takes longer than with single-family homes. Purchasing takes longer, renovations take longer, and finding a buyer takes longer. As long as you have a good understanding of this, it will help you to be patient enough to wait for the right deal to come along.
Don’t be afraid to think big
In commercial real estate, it’s just as hard to manage 10 units as it is to manage 50 units. That being the case, you might as well get used to thinking in grander terms, because the hassle is about the same, but the return can be much better on larger deals.
Learn the value of relationships
Networking might be more critical in commercial real estate than any other business, and your success may be tied to how many other investors and private lenders you can shake hands with. Most deals you come across are going to require more capital than you have on hand, and that means you’re going to need to know some people of means.
Have some good financing ready to go
It’s generally necessary to put more of a down payment on commercial properties than it would be for residential loans, and that means you have to have more financing available to you. When you become interested in a property, it’s already time to start setting up your financing, and researching which commercial real estate loan brokers in the area might be of value to you.
Accept the loss of due diligence money
While you wouldn’t want it to become a regular habit, you should accept the fact that you are occasionally going to lose your due diligence money, and that it’s actually the lesser of two evils. If you’re in the process of having an appraisal done on a commercial property, or any of the other necessary inspections, only to find out you don’t really want to purchase, it’s best to just walk away from the deal and take the loss. This is far more preferable to going through with the deal, and being saddled with something you don’t want.
Consider taking on a partner
You should think of a partner as another source of income, and this will often be necessary when you’re trying to pull off a bigger deal. Maybe this is a partner for one deal only, or maybe you can continue the relationship into several transactions. Either way, it may be worth your while to have that second source of income.