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Commercial real estate is one of the most complex asset classes to truly become successful in. Longer-term investments with high stakes make CRE investors some of the most careful in the industry. And at Legacy, we have decades of cumulative experience to know when and how to invest correctly in this asset class.

Unlike residential and multi-family, commercial real estate requires a more thorough approach to due diligence and a more complex financial process during acquisition. However, with the right team and knowledge, you can enjoy steady cash flow, longer lease terms, and more reliable tenants than in the residential market. The commercial market also has a steadier market overall, making it an ideal option for investors with the capital to make bigger deals. 

The best way to learn is from the experts. Below are five of the best pieces of advice from our team for how you can be successful and smart in CRE investing: 

Use modest financial projections. 

Commercial real estate is a long-term investment. It may take years to see the full benefits of your investment, and in that time, you’ll face economic ups and downs. While these may make your stomach flip at the moment, you don’t have to worry about long-term growth if you have realistic expectations for your property. 

Don’t wait once you’ve found the right opportunity. 

In commercial real estate, the right opportunity won’t wait for you. Once you’ve found the right property for your goals and your advisor gives you the go-ahead, make the deal. Properties with good projections don’t last long. If you wait until you are 100% certain, you may miss out on an investment that could build your portfolio tremendously.

Utilize local professionals. 

Agents, property and asset management, legal counsel, and brokers can all help you make the right choice with your commercial real estate investment. This asset class can be challenging to navigate on your own, so arm yourself with the knowledge of several industry professionals in order to succeed. 

Know your exit strategy before you buy. 

While it may seem like you shouldn’t think about selling before you even buy, it’s essential to consider your exit strategy and strategies for building cash flow and maintaining property value over time. Your exit strategy should be planned, or else you won’t have an end goal to work toward or a clear picture of where your investment is headed. 

For first-time CRE investors, choose well-known names.

While investing in commercial development or land may be enticing, for those still in their early years of CRE investing, investing in buildings with well-known names is never a bad idea. Choosing a department store or franchise as your tenant guarantees cash flow almost overnight, which can help you learn the ropes of the commercial space. While you can’t fully predict the success of your tenants or your vacancy rate over decades, you can place a safe bet on well-known tenants with a proven history of success.