With the internet at our fingertips, it can be enticing to read the first article that pops up on Google and assume that it has the most accurate information regarding investing in commercial real estate. The danger in this belief is that online articles are written daily which fail to dispel, or oftentimes even acknowledge, many common misconceptions that have flooded the commercial real estate market for years. Make an informed decision about your investment by educating yourself on these myths.
1. All Commercial Real Estate Vacancies are Advertised
When perusing the commercial real estate listings near you, you may be quick to assume that you are being offered the full menu of properties available to you, but this is most likely not the case. In fact, only a small portion of these properties are typically advertised to the general public.
2. Investing in Commercial Real Estate is too Costly
It is commonly believed that you must be a millionaire or a real estate guru to become a successful investor in commercial real estate. While it is true that most of these transactions do require a larger capital investment, there are still several banks and lenders that are willing to offer financing. Private lenders may even be more inclined due to the existing potential for greater profit and more stable, recurring income.
3. You Have to Start by Investing in Residential Real Estate
When you think about this logically, it sounds like all of the existing investors in commercial real estate may just be trying to keep this market to themselves. Nowhere does it state that you have to become an expert in residential investing as a prerequisite to success as a commercial real estate investor. The two markets don’t even speak the same language or follow the same rules, so to assume you must have experience in one to be successful to the other is an obvious oversight.
4. It’s Riskier
Most things in life require some measure of risk, particularly when we are talking about any type of investment. Commercial real estate is no different, but that doesn’t mean that you have to tuck your tail. Becoming well informed on the ins and outs of the market will help you find a property with a healthy balance of low risk and high profit.
5. It’s Too Time-Consuming
When considering investment in commercial real estate, many investors talk themselves out of the idea by convincing themselves that a bigger property means more work for them. It’s important to remember that your job as an investor is not to fix every little thing that could potentially go wrong with the property. If you set the property up with a management company and allow a commercial listing agent to handle the task of finding qualified tenants, you can focus on the job you are there to do, which is simply to put together a good deal.
6. “Market Rate” is the Absolute Price of the Property
This is a big misconception when it comes to commercial real estate. Potential investors see the price tag on the property and oftentimes make their decision based on that number. What you might be failing to acknowledge is that this is only the asking price by the seller. The terms of the lease will ultimately determine what you will pay, and they are just as negotiable as in any other type of real estate transaction.
7. Real Estate Agents are Experts in Commercial Properties
Assuming that just any real estate agent is the right choice to help you find the best commercial real estate investment property for you is a big mistake. Commercial real estate is entirely different than residential and you will want an agent who is in tune with the current market and knows what to look for to ensure the best deal for you.
8. Real Estate Services are Free
Not working with a real estate agent can be a huge and costly mistake to a commercial real estate investor, as they are familiar with the nuances of the ever-changing market. However, agents are not free. Although it is true that you (the investor) may not be the one directly writing their check, they are receiving their fees out of the transaction. Find a reputable and well-versed broker and it will be worth whatever the cost, as they can save you a lot in the negotiation process.
Ready to Invest in Commercial Real Estate in the Hattiesburg Area?
With so many myths out there to debunk, it’s important that you have a professional by your side as you dive into the commercial real estate market. At SVN|Southgate Realty, LLC, our team of dedicated Advisors specializes in commercial real estate sales and leasing and has a proven track record of success. We are one hundred percent committed to you and with you every step of the way to ensure that the leasing process goes smoothly from start to finish. Take a look at our properties today and contact us to get the search started.