Out Of The Box Ways To Search For Commercial Properties
Commercial deals can be lucrative, bringing in revenue on a steady basis. Whether buying RE that is MFH, or SFH, renting it out for years, or just keeping it temporarily, renovating it and then “flipping” it within a certain time frame, can bring big returns on an initial investment. While some commercial deals are listed on the MLS and other RE listing services, not all are. These “off market” deals can be harder to locate, and attending meetups, connecting with brokers and insurance agents, as well as attorneys, can be helpful in gaining knowledge about these listings. Simply driving around to see what exists in an area also can be helpful. However, there are many more ways to think “outside the box” and locate these types of properties. Here are a few additional methods of locating these commercial deals. Although some are not readily thought of, they surely can work!
- Attend real estate related conferences. Chances are good that some of the attendees might own properties or may know someone who is selling them. They might also be looking to sell in the future and would be pleased to meet someone that is interested in one or more of their properties. A property owner might be interested in entertaining an offer verbally even if they were not thinking of selling at this moment. A good offer can sometimes sway a property owner into selling. Types of conferences can also include local business and property owner associations. Many times, business owners have more than one type of business and do own commercial properties outside their primary business.
- Local service companies may have knowledge about commercial properties that are up for sale. Plumbers, contractors, landscapers, and property managers all visit properties that are commercial from time to time to provide services or do repairs. They can be contracted for many years for service work to an owner and have the inside knowledge of whether a property is for sale or will be for sale shortly. If they have a good relationship with an owner, they will know when and if a property will become available for sale.
- Get to know your own banker! Bankers are a useful connection to have as any pending sale from a foreclosure that failed to meet price at auction, will be going through a bank, and your banker is knowledgeable about these. Off market REO sales can be difficult to find as they can be kept quiet and only divulged to certain realtors or certain listing directories. These sales are a somewhat different type of sale with some other requirements that must be met before sale. However, the longer a bank hangs onto a property, the more revenue they lose. Most banks like to see these properties sold ASAP, and your banker may very well be very helpful and glad that you are inquiring into the properties they have available. REO properties are often owned by the bank or lender after an unsuccessful attempt at auction because of inability to meet the price asked. Auction sales can occur because of back taxes owed, or because a mortgage commitment is in arrears. Since money is being lost rapidly the longer these properties sit unsold, bankers are generally very helpful in assisting others that may qualify to purchase these properties.
- Inquire with your own insurance agent or even visit insurance agencies to see if they know of any off- market properties. Insurance is needed on all properties, especially investment properties. Rental insurance many times is a requirement for residents or even businesses who rent from a commercial property owner. Businesses can rent space as much as residential consumers, and quite a few MFH units could be either commercial and residential, depending upon the zoning. Insurance agents can be quite helpful in locating properties and sharing information, since they are salespeople and hopefully someday may acquire new business by sharing information and being helpful to you.
- Inquire with tax assessors in the area where you are seeking a commercial real estate investment. If a particular property “catches your eye”, all properties and the status of tax payments, are typically public knowledge. Any tax assessor can look up the property via the address provided. Properties all have a specific tax ID number assigned and if an owner is falling behind on taxes, there is a good chance the property is either already being marketed quietly for sale, or will be coming up for foreclosure and auction shortly, depending upon the amount of the arrearages. Tax assessors are very knowledgeable in the area of pending property sales or properties that are already being marketed quietly. The tax assessor is oftentimes an elected official and is most happy to serve the public in any way.
- At the risk of sounding repetitive, driving around an area and assessing which properties look rundown is a great way to find a property many times. If a property looks like it is not cared for, the current owner might already be looking to sell quietly, or actively marketing within their own circle of investors. A rundown look can signal some type of financial problems for the current owner and they may welcome an offer from someone. The way to find the owner, of course, is through the tax assessor’s office, and the name and address of the owner is also public record. A letter can be sent to the owner then, and a response from them may lead to obtaining a great commercial property at a good price! A word of caution in this method, however, is to learn what issues the property has. Code issues, both state and municipal may exist, and there might be fines for violations of code and zoning laws.
- If a business or businesses rent in a commercial property, asking the businesses within the property about the status of the property can be done. They generally will have knowledge about whether the property will be for sale shortly or if it is already being marketed quietly. Since businesses like to maintain the same locations for their own customers, the owners of businesses that are renting space in commercial properties can be quite abreast of the status. They are under no obligation to share but can be happy to do so, hoping that a good investor who takes care of the property will purchase it.
A serious investor can use a variety of means to find commercial properties for sale, as well as other methods. However, if using “out of the box” methods, especially when considering an REO property, or potential sale because of financial hardship by the current owner, does require a lot of research and due diligence. Always seek the advice of a good RE attorney when considering a foreclosure or REO purchase to ensure that you are investing with “your eyes wide open.” Surprises after a sale are to be avoided and problems that are existing need to be discovered before any down payments are made or sales contracts occur. Wise investors not only know how to discover the hidden gems of properties that are out there, but they also know how to avoid problems in the future after a sale. If thinking of purchasing an investment outside your own county or state, MORE due diligence is needed and finding out local and state laws and statutes is imperative. Knowledge and due diligence are always advised in any type of investment as haste can make waste!