How to buy commercial real estate

Determine Your Down Payment Amount

Before considering or approving a loan application, most commercial lenders ask for a minimum 30% down payment. Your LTV cost will decrease when investing in a commercial property and this means that you’ll likely require the borrower to contribute more to the down payment.

Because it’s much harder to find commercial tenants than residential ones, and because the sector is more exposed to changes in the economy, buying a property which already has a commercially successful tenant on a long-term lease is the holy grail of commercial property investment.

Buying commercial property is commonly known as a worthwhile investment. Investment costs, including additions and customizations for tenants, are significantly higher than residential properties. In turn, the returns on commercial properties are also significantly higher.

LoopNet. LoopNet is one of the most recognized CRE search engines and offers a number of different types of commercial property including office, multifamily, industrial, retail, land, agricultural, hotel & motel, and residential income properties.

Good deals may be on the horizon

Thanks to increased work-from-home arrangements, as well as the overall economic downturn, interest in some sectors of commercial real estate waned in 2020. The dip has allowed CRE prices to decline a bit — at least in some sectors.