Updated about 5 years ago on . Most recent reply
Some questions from a newbie
I am the owner of a growing company and sick of paying rent and we are looking at buying a building for around 1M. I am also interested in learning about commercial real estate and becoming an investor in that arena. I am familiar with the stock market but have little real estate experience beside being a tenant. However, my cousin has bought several commercial properties and can guide me as well. Having said that, I prefer to learn to do my first deal myself and not pay a buyer's agent. The majority of our business is now online but we still need an 1-2 offices for several employees. So:
The idea is to buy a ~5000sqft standalone building, renovate it some, and start renting out executive suites. Perhaps 20 offices, rented one by one for short terms in addition to other business services. I realize that this is no longer real estate investing but starting another business, but this is the direction I want to go in. My questions are:
1. I read the commercial real estate for dummies book (don't laugh), what else would you recommend?
2. Can I do this without a buyer's agent and just hire my own closing attorney and inspection company?
3. I had a debate with my cousin who thinks most commercial transactions use buyer's agents and those buyer's agent fees are paid by the seller. And if that be the case, if one buys without a buyer's agent, say 2% of the commission can be negotiated. However, if most transactions are without buyer's agents, the selling agent/broker would be used to their 6% and that would not be a tactic, thoughts?
4. Any other general principles or guidelines or advice you may have for me?
Most Popular Reply
The CRE for dummies book is a great start! Peter Harris of CRE for dummies fame has a great YouTube channel too, here.
In the commercial multifamily world we do not use buyer's agents generally speaking. I can't talk to industrial or retail space, though. I would focus less on saving the broker commission and try to look for a property that fits your business and needs the best. If you do choose to use a buyer's agent and you find a good one, they should be worth their commission.
I would bear in mind the costs of your buildout. See if your cousin or someone else with experience in it can help you figure out what it'll cost to turn the building into what you need.