How to Invest in Commercial Real Estate

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The term "commercial real property" includes parcels, with or without buildings, used for business or retail purposes. Investment in commercial real estate involves a significant cash commitment and investors typically work with partners or investment groups to purchase larger commercial properties. Investors also work with experienced commercial real estate agents and a title agent trained in commercial property work.

Match your commercial real estate interests with various geographic regions matching your interests. Investing in commercial real estate involves extensive knowledge in a variety of commercial market classifications, including small and large retail, shopping centers, rental properties, office buildings and industrial structures. Matching your commercial real estate interests with targeted geographic regions ripe for investment requires years of following the real estate and investment markets. Once you feel comfortable with one or more commercial types of investment opportunities, research the geographic areas best suited to your interests. Conduct research by reading regional commercial real estate reports and meeting with other investors at conventions and professional seminars. The International Council of Shopping Centers, for instance, holds international, nation and regional conventions offering education seminars and training sessions.

Network with other commercial investors and join finance partnerships. Investment partnerships provide cash reserves, but they also mean your fellow investors must share your investment strategies. Unless you have available funds for the commercial investment, adding partners offers the option to fund large commercial ventures. Meet potential partners at local commercial property training sessions and at professional conventions.

Network with commercial property lenders. The National Real Estate Investor noted commercial lenders tightened lending practices with the economic decline beginning in late 2009, and slow markets mean a larger commitment of cash and collateral required for commercial investment plans. Work with several qualified lenders to develop a presentation package documenting your financial backing for use in presenting offers on commercial properties.

Locate a licensed commercial real estate broker with specialty certifications in your interest areas and also an experienced title researcher. A licensed Realtor can provide current knowledge of the market, experience in negotiating sales prices and contract terms and the strategy know-how in pricing your offer. The real estate agent also offers exclusive access to a market of commercial properties. An experienced title agent also offers valuable knowledge for commercial property investors. Title agents research current property ownership, present and past loans and document comparable sales made in your targeted geographic region.

Research specific properties and make offers on the real estate. Once your investment team decides on a property, consult with your commercial real estate agent to write a legal contract for the property. Ask your title agent to construct a preliminary title report to document the property history. This report assists in developing a price for the property and any necessary terms involving the physical condition, zoning and community restrictions, as well as any restrictions on future development or prohibitions on property modifications.