You may be considering the purchase of small commercial real estate. You’ve heard there’s good cash flow in commercial real estate. You have looked around and it seems that there are many properties for sale at very good prices.

How can you find out if commercial real estate is a business you’d like? There are some questions to ask yourself before you buy that commercial real estate.

1. What type of property should I invest in? There are several types of commercial real estate; Apartment building, office building, commercial buildings, mobile home parks, self-storage units, mobile home parks, an existing business, and many more.
2. How do you want to participate in your investment? Do you want to invest your time and energy as well as your money? Do you want to invest your money and let someone else do the heavy lifting?
3. How long do you want to be involved with this investment? Do you want to be involved in this venture for less than a year or more than 10 years?
4. In which area do you want to invest? Do you want the investment property close enough that you can check on it frequently? Do you want the property to be easy to get to so you can work on the property?
5. Are you going to finance the investment? If so, can you qualify for the funds? Can the investment property qualify for the amount of money you need?
6. What return on investment do you expect? Can the real estate investment you are considering return that rate? Is commercial real estate a better return on investment than other investments? Is the risk higher?
7. What are the government regulations that affect commercial property? Each state, county, city, and small community has its own set of rules. Part of your research is to find out what those regulations are and when and if they are likely to change in the near future.
8. What about income tax, does the investment leave some margin for profit after taxes? Of course, you will hire a good prosecutor to help you with the ongoing business. But consider getting the advice of a real estate tax attorney before you buy. You want to know how to buy a commercial property that takes advantage of the tax laws.
9. Is this investment high or low risk? There are many commercial property investments that are low risk, if you know what you’re doing. These same investments become high risk when you don’t know what you’re doing. Also, there are high-risk investments even when you know what you’re doing. It is very bad to take on a high risk investment when you are also a high risk investor (no experience and/or no knowledge in that particular area).
10. Are you looking for an income-generating property or a property that will grow in value? Of course you would like to have both. A few years ago you could have both, but now that’s not usually the case. There are always exceptions.

Deciding to make an investment in commercial real estate is a big decision. It is very important to ask yourself a lot of questions about this decision. It is equally important that you ask a lot of questions about that particular property.

The biggest problem investors have is that they don’t even know the questions to ask. Believe it or not, the questions are more important than the answers.

Let me give you an example. A few years ago I was looking at a property in Utah. I made my usual long list of questions. Everything seemed to be going well. I was ready to make an offer and then my friend asked me about the water rights. Water rights? What’s that? Where I live, water rights are not a problem, so I never need to ask about water rights, we have plenty of water.

I found out that I couldn’t use the property for the purpose I was buying due to water rights. I almost lost a lot of money just because I didn’t know all the questions.

Get advice and information on investing in commercial properties, including multi-family, office and retail buildings, mobile home parks, warehouses, self-storage and other property types. Get great ideas and strategies for buying, selling, and managing your business investment property.
The next question you may ask yourself is, where and how can I get more information and training?