First Time Caller Long Time Listener - Commercial Questions

[Jake L.]

Hey Everyone,

I have been absorbing as much info to get started as I can, and in that process have mostly focussed on residential properties to invest. I have also kept my eye on some commercial properties as they came up but didn't have the same depth of knowledge there.

My questions are, what are the keys and or top advice for starting out with commercial? I have a unit near me in a great location, needs some work as it was being rented and or used as medical/dentist offices. I am trying to better understand how to renovate to attract more tenants should I  make an offer. It is currently classed as a B type unit space and I would love to renovate to an A rated space with possible mixed-use options.

What are everyones recommendations for things to watch out for? What makes sense for renovations to a mixed unit and or just going from B to A class? Any initial advice on commercial do's and don'ts? What type of style office or key upgrades to the unit would you all recommend?

Appreciate everyone's help!

-Jake

[Russ Kitzberger]

Quote from @Bob Stevens:

Quote from @Scott E.:

I recommend you start by spending the next couple of months scouring every deal available on loopnet and Crexi, and studying every OM you can get your hands on.

Commercial brokers generally paint a prettier picture than reality on their OMs, but you can still learn a lot from them in terms of how to underwrite a deal and market demographics.

Once you get through this phase, pick a class. Retail, office, medical, multifamily, storage, industrial. Pick one and become more of an expert in that class.

Last, find a broker that specializing in the area you want to invest in and who specializes in the class you want to invest in.

The issue is the realtor is NOT part of his team. All they want to do is sell it. He needs to connect with a local investor doing deals. Learn and earn, that's exactly how I started. He will not have any idea if it's a good deal or not. He does not know reno costs all the expenditures heck he does not even know how to reno it or should even make an offer. If he walks in with a realtor the realtor will " sell " him then he will be in way over his head. He is brand new. 

Just my opinion but what do I know :) 

Most CRE brokers are not REALTORS, they are not held to the REALTOR ethics. Aside from that if you do find a REALTOR, you need to vet them and make sure they are Commercial REALTORS, because you are correct, most REALTORS sell houses, they have NO idea about commercial costs.

A telltale sign of inaptitude is if you are in a major market area and the agent doesn't have their own CoStar subscription. If they can't spend $1k+/- a month on their data sources, they are NOT actively involved in CRE and have limited access to leasing data.


Jake/OP If you find a REALTOR that is in commercial full time, has CoStar and does some leasing; that is a slam dunk, hire that person and pay their retainer to be your advisor.