Commercial real estate investment is an excellent way to build wealth and increase your monthly revenue. When it is done correctly, investing in commercial property is a fantastic asset that provides long-term benefits.
Investing in Commercial Property Types
Before investing in commercial property, it is necessary to understand the different types of commercial real estate, Oklahoma, and which ones you would like to take on in the future.
Commercial Property Investments
Commercial property investment can include industrial property for sale Oklahoma City, warehouse for sale OKC, office space, retail space, multifamily units, and properties with a special purpose.
● Industrial properties include warehouse for sale OKC and manufacturing locations. Expanding your industrial property assets is relatively easy once you get started.
● Office space covers everything from single-tenant offices to high rise buildings. You can choose class A, which is renovated with upscale amenities. Class B will require some investment and repairs, but they are in good condition. Class C requires a great deal of time and money. They are often poorly located and in need of repair.
● Retail space includes banks, strip centers, restaurants, and other retail markets.
● Multifamily real estate is anything with more than one family unit, such as townhouses or apartments. This is a common starting point for investors.
● Special purpose properties do not fall into typical categories, including mixed-use development properties, tourism, schools, hotels, etc.
Starting Commercial Real Estate Investment
The first step to commercial real estate investment is finding your niche. We have already covered the different types of commercial real estate in OKC. No matter which option you choose, always look for properties that have a good location.
Once you know the type of property you want, look at comparables to discover the value of different properties. Research recent purchase prices in the area. Only look at properties within 10 percent of the size you are looking to purchase.
Next, you need to know your metrics:
● Cap Rate – This rate is the ratio of Net operating income to the value of your property.
● Net operating income – This is all property revenue, minus all operating expenses
● Cash-on-cash – This is the return on the investment after the mortgage.
Commercial Real Estate Loans
There are different types of commercial real estate loans available, including:
● Conventional Loan
● Commercial Bridge Loan
● Hard Money Loan
● Conduit Loan
● Small Business Administration (SBA) 7(a) Loan
● Certified Development Company (CDC) / SBA 504 Loan
When you begin your commercial real estate investment journey, whether industrial property for sale Oklahoma City or automotive property for sale, consider working with a professional to avoid the common mistakes of commercial property investment. We can manage comparables and metrics and also provide advice on obtaining a loan. Please contact us if you have any questions.