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Writer's pictureJeff@CEGspaces
Nov 12, 20212 min read

Tips to Begin Investing in Commercial Real Estate (CRE)

Updated: May 13

If 2020 taught us anything, it’s that you never know what’s going to happen. So, it’s wise to have your money invested across a variety of assets, with commercial real estate being one excellent option.


Downtown Minneapolis skyline at night. Reflections of light on the Mississippi River. Bridge with round arches at the below..

Why excellent? Where else can you find an investment that includes cash flow and equity paydown? This happens when the tenant––your business––pays down your bank note. You may also benefit from both appreciation (we’re seeing a lot of that with costs on the rise) and tax depreciation. Many buyers and investors are seeing cost segregation (accelerated depreciation) opportunities as well.


If you’re new to CRE investing, here are my five tips to consider before you sign that first purchase agreement:


1. Do your research. Listen to podcasts, read books, and talk to investors. Be sure to asks questions and listen. It’s also helpful to understand how to read contracts and gain an understanding of your local economy. Brokers can help, as we are experts in the business.


2. Decide what property type best suits your interest and budget. Categories and examples include:

  • Multifamily: Duplex, triplex, quadruplex, and apartment buildings

  • Office: Buildings vary from one office to office centers and skyscrapers; grouped by Class A (best construction and location), B, and C

  • Retail: Small shops, strip malls, power centers, community retail centers and large shopping complexes

  • Industrial: Manufacturing, light assembly, warehouses, flex warehouses (includes office), distribution centers, and storage facilities

  • Hospitality: Hotels and motels

  • Mixed Use: Combination of any of the previous categories

  • Land: Undeveloped land, infill (could be vacant land or underdeveloped), and brownfield (previously used for commercial or industrial, but can be cleaned up and re-used)

  • Special Purpose: Parking lots/ramps, stadiums, outdoor storage, etc.


3. Find a mentor or join an CRE investing group. Look within your community and talk to people you know. Someone may know someone. Otherwise, intentionally connect with people that work in CRE.


4. Build a network of specialists. You’ll need to rely on the expertise of brokers, bankers, lawyers, and accountants. Find people you can trust and those who know the local CRE business.


5. Smaller deals are often seeds to get into bigger deals. Starting small gives you the opportunity to gain experience without taking catastrophic risk.


Downtown St. Paul skyline and bridge with rounded arches reflecting on the Mississippi River.

Conclusion

Commercial real estate investing doesn’t have to be a scary or intimidating move. You also don’t need to have enormous amounts of cash to begin. You do need to know the risks and benefits, find the right connections, and determine which deal fits your goals and lifestyle. I’m here to help if you have any questions. Send me an email or give me a call if you want to discuss these tips to begin investing in commercial real estate.



Smiling Jeff Salzbrun

Jeff Salzbrun is the owner and broker of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in many sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.






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