Things to consider when purchasing your first commercial property:
01 — What types of property interest you?
02 — How involved do you want to be?
Active or passive investor:
• Land development
• Land banking
• Value-add or stabilized
• Long-term hold
03 — What rate of return are you looking for?
Return on investment (ROI):
• Capitalization rate (Cap rate) — rate of return on an investment property based on the income it’s expected to generate but does not take debt/financing into consideration
• Cash on cash — cash income earned on cash invested in a property while taking debt/financing into consideration
05 — Who should you be working with?
Establish your team:
• Commercial lender
• Property manager
• Commercial real estate broker