How to Create An Effective CRE Tour
An effective tour can help sell commercial property. Here’s what you need to know.
There’s a common misconception that investing in commercial real estate requires enormous capital. It doesn’t. While it’s certainly true that commercial properties do tend to be pricier than residential ones, that doesn’t mean they require an enormous pool of wealth.
Believe it or not, you can gain experience and begin building a portfolio in commercial real estate with only a small investment (and without having to tap the bank for a massive loan).
As noted by personal finance and wealth expert Jeff Rose, commercial real estate investment and ownership are not one and the same. If you want to enjoy some of the benefits of real estate investment without the headaches associated with running your own property, there are multiple options available to you. These include:
Franchises are an incredibly common sight in almost every major town and city. There’s a reason for that, and it’s not just because people are suckers for familiarity. Putting money towards opening a franchise is a lower-cost alternative to building your own business from the ground-up, whether your field is property rentals or something else.
Not only that, you gain the marketing power associated with that brand, as well as support from what is presumably a global (or at least state-wide) enterprise. In addition to being a lower-cost alternative to owning your own commercial property, a franchise investment is also significantly lower risk. There are several reasons for that.
When a bank acquires a property and is unable to sell it for a certain period of time, it eventually puts that property up for auction in order to recoup its loss. This is an incredible opportunity from an investment perspective. At a real estate auction, you can potentially acquire a property at significantly below market value, and in a competitive market at that.
Ignore the common myth that a property up for auction is in some way damaged or inferior to one that’s purchased through more traditional means. There are many reasons why a property might be up for auction. While there is an element of risk here, a bit of research goes a very long way.
Don’t just limit yourself to purchasing real estate, either. Say, for example, you’ve purchased a grocery store at an auction. You can attend other auctions to buy necessary equipment such as freezers, point of sale systems, shelving, and so on.
Last but certainly not least, any house flipper will tell you that while risky, foreclosures and real estate notes also have the potential for enormous returns. This is true of commercial property as much as residential. Provided you’re willing to put forward the money to repair any damages and carry out necessary renovations, a foreclosed property is an excellent way to make an inroad into commercial real estate.
Just make sure you do your due diligence here. Some foreclosed properties may be extremely damaged, subject to liens, or in areas where there simply isn’t any business potential. A thorough understanding of the market will be a significant boon here, as will a willingness to spend the necessary hours looking into a property’s history.
If you can’t find anything online and the seller seems flighty when you ask for details, consider asking around the neighborhood. When foreclosures happen, people talk. All you need to do is listen.
Knowledge is something that can be acquired with experience. Capital is something that takes time to cultivate. By understanding this, you can start making savvier decisions, and turn even a small investment in commercial property into something greater.