Buying Your First Investment Property? Follow These Tips from the Pros

buying your first investment property in florida

It pays to do your research before buying an investment property. The amount of money at stake is significant, and you want the best return on your investment possible. We’ve compiled a list of tips from the real estate pros that will help you navigate the process of buying your first investment property.

3 Ways To Buy Your First Commercial Real Estate Property

There are several ways to approach completing your first commercial transaction. There are typically three main ways to purchase a commercial building – outright, through land contracts, or with loans. By understanding your different options, you can make an informed decision while taking advantage of potential tax benefits.

1. Purchase Property Yourself

Purchasing commercial property can be profitable, but it’s important to understand the requirements of a commercial real estate loan before attempting this investment strategy. Banks generally require more money for commercial property than residential property and may scrutinize applications more closely. It’s also not unusual to be asked to provide a resume, business plan, or other financial information for consideration. Ultimately, the type of property will be a large factor in your real estate deal. If you aren’t to purchase the property yourself the first time, don’t fret. After you have experience purchasing and managing several smaller properties, banks may then be more likely to grant loans for larger investments in commercial real estate.

2. Find a Partner

Finding a partner to help break into commercial real estate can be a great way to start. One of the most common ways to do so is with a silent partner. This type of financing comes in part through someone who invests the property and is not actively involved in management decisions. Family, friends, or business contacts may be a place to start looking for a silent partner.

Real estate investments have the potential to show strong returns; however, it can take natural business acumen, time investment, knowledge of the industry, commitment, and sound judgment to turn those investments into lucrative deals. An experienced commercial broker knows how to spot good investments and understand legal regulations that will add value to any venture. Additionally, having access to networks through an established business contact may provide an extra edge when competing on larger deals where due diligence or financing requirements are already underway. Finding a reliable business partner when breaking into commercial real estate can reduce risks while increasing profits produced by new investments made by the partnership.

3. Invest in Real Estate Syndication

Real estate syndication is a great way for those interested in commercial real estate to enter the market without taking on the burden of managing and maintaining a property. It involves pooling funds from investors looking to obtain ownership shares in the property. While some upfront bonuses and fees may be awarded to the syndicator, investors typically do not receive any income until later in the deal. Understanding each business loan option is essential in ensuring you get the highest return on your real estate investing with minimal risk.

Tips on Buying Your First Investment Property

Be Honest About Your Prospects

Investing in commercial property is about the furthest thing from a “get rich quick” scheme there is. That’s exactly what makes investment property appealing. If you approach it right, it’s a sound, stable, and secure investment that will benefit you for decades to come.

This also means you can’t go into it expecting an immediate return on investment. While property can be a valuable asset, if your personal finances aren’t in order then adding a real estate investment on top of that may not be the right choice for you. The most important thing is that you take your time before you make a big investment like this and approach it from a position of brutal honesty.

Go In With a Plan

Investing in property, just like any other investment, will go much better if you approach it with a sound plan. This is especially true when it’s your first investment property and you don’t have the benefit of previous experience to guide you.

You often see people who are itching to jump into the market and do so before they are truly ready, and that usually has dire consequences. Like any income stream, when you have all information, you’ll make better decisions.

It’s best to take your time and ensure you thoroughly understand every aspect of investing from the loan application to the property values.

Pay Attention to Location

You shouldn’t consider real estate in a vacuum, as a building is so much more than what’s in between the walls. The perfect building could be a terrible commercial investment if it’s not in a good location. A good location doesn’t just mean low crime and high income either, what’s equally important is that it’s in the “right” location.

What’s right for one person may not be right for another so this is another area where your plan will come in handy. The main takeaway here is that you should think about the building location and how that fits into the plans you have for your investment.

Choose the Best Property Type

There are many ways to begin your venture in property investing. There are a number of commercial property types including warehouses, office space, and larger properties that have several purposes. The type of investing you pursue may align with other interests. For example, if you need an office space for a business you may consider buying the building and renting out other offices. On the other hand, you may simply believe industrial buildings are a helpful passive income stream. When it comes to commercial investing, take your time and consider if your interests align with a specific type of property.

Don’t Fly Solo

Since this is your first investment property, it’s unwise to attempt to do everything yourself. Even those with prior experience in real estate investments often partner with professional real estate firms to ensure they purchase a good investment property.

The commercial real estate market is full of potholes and traps, and having the years of experience and wealth of resources possessed by a real estate firm at your disposal will be an invaluable tool in achieving your investment goals.

At Ullian Realty we’ll put our 45-plus years of combined experience, specifically in the Brevard County Space Coast commercial real estate market, to work to find you the perfect investment property. Please contact us today for more information on investing in property in the Melbourne, Florida area. Our real estate process puts us a step ahead of the competition, and we will help you find the right investment property for your needs.