Tired of Competitive Residential Markets? Here’s How to Break Into Commercial Real Estate!


Many investors in today’s marketplace are tired of how overpriced and competitive residential rentals have become. Therefore, more and more investors are considering investing in commercial real estate instead. Commercial real estate investing has some similarities to residential investing and many differences. We recorded today’s video from one of our commercial buildings — a 10,000 SF building that has 18 small business tenants located in Trenton, NJ. Matt begins the video explaining the value of investing in commercial real estate. He then shares three tips to break into this niche of real estate investing!

Related: Why the Wealthy Put Their Money Into Multifamily & Commercial Real Estate

How to Break Into Commercial Real Estate

Are you considering starting in commercial real estate? What questions or concerns do you have?

Thanks as always for watching, and let’s get some conversation going!

About Author

Matt Faircloth

In 2005, Matt founded The DeRosa Group along with his wife, Elizabeth. At the time, the two person company owned and managed two assets – a single family home and a duplex. Over the last nine years, they have grown the company to a 12 person team owning and managing over five million dollars in residential and commercial assets throughout the central NJ and Philadelphia area. One of DeRosa’s mantras is “to make money while making a difference.”


  1. Orane Williams

    Hi Matt thanks for the tips in your video. I actually met your wife at a seminar in this very building. would you recommend someone bypassing residential real estate if they eventually intend to invest in commercial real estate? What do you recommend for someone be able to Source funds for their first commercial deal?

    • Matt Faircloth

      Hey Orane,
      Good to hear from you. I think doing a commercial deal as your first out of the gate will be a heavy lift, but it’s doable. You need to be able to obtain a bank loan so good credit and income outside of real estate income is a must. You will also need your own cash or investors that are willing to work with you even though you don’t have any experience in the business or a track record. It would also need to be a solid deal, not too much speculation, and an easier lift to get leased. If your goal is to be a commercial RE investor, I would try and confirm you have these things and then go for it.
      I hope that helps!

      • Dave Roberts

        Hi Matt,
        I’m currently trying to buy some self-storage facilities (I know, like everyone else) and I haven’t gotten to the financing piece yet as none of our offers have hit the mark. But from my understanding I thought the banks are more interested in the viability of the deal itself than the viability of you as an individual. So credit scores, W2 income etc are less important than the NOI of the business. Has this not been your experience when dealing with the banks?

    • Matt Faircloth

      Hey Bob,
      Glad you enjoyed it! The returns are good, and the commercial market is less competitive than the residential market so prices seem to be more reasonable. Actual returns depend on your market so it’s hard to say, and it really goes deal by deal. Down payments will be the same, between 25% and 30% of the sale price of the property. Single or multi-tenant doesn’t matter specifically, what does matter are the terms of the lease – who is paying for utilities and Common Area Maintenance, how long are the leases, and utility arrangements. Those are really what drive value for deals like this and can make a deal a good or bad one.
      I hope that helps!

  2. Jiri Vetyska

    Hi Matt, great introduction to commercial, it may certainly be something to look into. I have one question, since longer term leases are the norm with CRE, how would you normally structure such a longer lease, such as a 5 year lease when it comes to the monthly payments. Are there automatic increases factored into each year, or is the amount set up front and fixed for the duration? Any specific provision to breaking the lease?

  3. Matt,

    This is a great introduction to commercial real estate and I really like your positive but careful tone in your videos. I bought a commercial property many years ago for my own business and got badly burned, and it’s only now that I’m dabbling in the area. I learned a lot from that investment, and from being involved in the commercial property business through work.

    First, it became clear to me that the quality of the leases is very important. Just like multifamily, the value of the property is pretty much exclusively based on the multiple of the income. The second thing I learned is that the cycles are much longer. A commercial space can sit for years without leasing and this is fairly rare in multifamily. So a dog can be a dog for a long time, but conversely you can get very reliable income from a good property. That also means that you should have ample funding. As you mention, if you can bring value to a commercial space you can leverage a lot of investment, whereas this is much harder in, say, a single family home or a small multifamily property. The last thing I learned is that you must do environmental due diligence. It’s also a factor in residential (e.g. buying near a dry cleaning site is probably a bad idea, and you have to look for oil tanks etc,). But, in commercial, you can have a lot of surprises from past use. There are a lot of benefits to commercial properties and the right fit can make a lot of sense. But it’s definitely a different game than residential. I’m personally dabbling by owning a very small mixed use property (2 bedroom apt and retail space). So the 2 bedroom apartment can carry the property while I figure out what to do with the commercial space.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here