How to Prepare Mentally and Financially for Getting into Commercial Real Estate Investing

 April 27, 2020

By  Guy Gray

Alexander Graham Bell, inventor of the telephone, once said, “Before anything else, preparation is the key to success.” It doesn’t matter if you’re in commercial real estate, professional sports or sandwich building—if you want to be successful, you have to prepare for it.

If you’re considering getting into commercial real estate investing, this goes without saying. Here are some ways to prepare for it mentally and financially.

Get to Know the Fundamentals: It’s always a good idea to lay a solid foundation of knowledge no matter what you’re doing. Developing a strong understanding of CRE fundamentals, from the general terms to the details of a lease, will help you navigate the initial investment process and beyond.

There are several credible resources  you can lean on to expand your investment knowledge. Here are some of them:

–   Podcasts: A great way to multitask, podcasts help you expand your CRE investment knowledge while you commute or complete other tasks. Here are six we recommend.

–   Articles: Whether you bookmark them on your browser or subscribe to newsletters, articles and blogs are great because there is always a new one.

–   Other: There are other resources out there as well, from e-books and webinars to infographics and calculators. BiggerPockets has done a great job of consolidating many of these resources for you.

–   It helps to know how the approach for CRE investing differs from the respective approaches of different roles within the industry. We broke down one aspect of this in our article explaining the differences between commercial and residential real-estate investing.

Determine Your Interests: Commercial real estate comes in all shapes and sizes. The assortment includes office, retail, multifamily, industrial, and mixed-use. Take some time to determine your interests. By narrowing your options, you’ll have a clearer starting point and will get more out of your research. Take a closer look at each type here.

Market Research: Every market comes with a unique set of metrics that should factor into your investment decisions. Dedicate a good amount of time to investigating any market you have interest in. Focus on details like current supply and demand, planned developments, number of vacancies in the area, and the current market cycle.

Assemble a Team: Investing in CRE is complex. You need to surround yourself with a team that you can trust. In addition to a broker, accountant, and lawyer that specializes in commercial real estate, consider adding specialists, like appraisers or building engineers, to your team.

Explore Real Estate Finance: This is a given, but real estate finance is intricate. Here are two places to start: 

–   Dive into the vast array of commercial real estate loans.

–   Develop an understanding of vital CRE calculations and financial ratios.

Get the Right Tools in Place: There are so many great resources out there that’ll help you throughout the investing process, but a good tool to start with is one that’ll help you stay organized. Quarem helps CRE Pros organize and track key metrics related to their owned and leased commercial real estate so they can forecast, scale up and gain insights into their financials. The Properties feature will help you organize your investing priorities and metrics so you can make reliable decisions. By setting this up before you make the plunge in CRE investing, you’ll be in a better position for the future.

To see for yourself how Quarem helps you prepare for commercial real estate investing, request a demo today.

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About the author 

Guy Gray

Guy Gray serves as Chief Operating Officer overseeing our technology and client services teams. He is responsible for guiding Quarem application development, networking and security, as well as new client implementations.

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