Optimizing the Commercial Real Estate Prospecting Process
The real estate market has always been a competitive place to invest, mainly because it’s so consistently lucrative when you do it well. There is always demand for land and buildings, but you do have to know which commercial real estate niches are big at any given moment, and that changes depending on exactly where you’re at. Even working within the same city, two investors concentrating on different neighborhoods might need to have exactly opposite approaches to be successful. The one thing that is consistent? You need to be nimble when it comes to making offers and closing.
Real estate purchases that get bogged down in the financing process drag out the expenses for the buyer and the seller, so being able to guarantee a fast closing can make the difference between your bid and another seller’s, even if they’ve offered a slightly better price. How can you make sure you’re ready to close quickly? There are a few ways. The first is through preapproval. If you’re a regular investor and there’s a financial institution you have a relationship with already, they might be willing to guarantee you a closing on a property at a certain price and in a certain condition so you can shop with confidence, the same way they preapprove homebuyers.
If that’s not where you’re at in your investment process, don’t worry. There are plenty of other ways to make sure you can move quickly when it’s time to make a purchase. Short-term financing can provide you with a fast closing, without needing to have a long preapproval process with a bank before you enter the market. That makes it easy to decide you need it if there are hiccups in the middle of your regular financing process, too. The best part? Many short-term financing solutions for commercial real estate are agnostic about the building’s condition, so you can finance a purchase, improve it, and then finance it into a long-term structure that’s ideal for your investment strategy.
Short-term financing is also ideal for investors who don’t plan on holding a property for a long time. It gives you the opportunity to reposition and renovate, then resell, all while paying interest-only payments. If you find the right financing partner, you can even get funding based on the projected sale price and not the initial purchase price. Finding the lender who will provide that kind of service might take some time, though, because not every feature of every financial product is open to first-timers. As you work to build your commercial real estate portfolio, keep in mind how your financing options will change as your assets grow.