Investing in commercial real estate can be exceptionally lucrative. When considering such a financial commitment, it is beneficial to separate fact from fiction.
Many discouraging misconceptions surround buying business properties. Recognizing what makes them false should provide the confidence to move forward.
Myth #1: You need to be an expert
Some believe that only seasoned professionals are successful investors in commercial real estate. While knowledge is undoubtedly an advantage, it is not a prerequisite. Many start with no more than a basic understanding of the field.
Myth #2: Commercial real estate is inaccessible to small investors
Commercial real estate deals are not limited to the wealthy. Real estate investment trusts and crowdfunding are excellent alternatives for those without abundant resources.
Myth #3: Location is everything
While location matters, it is not the sole determinant of a successful commercial real estate investment. Factors such as market trends, property condition and growth potential are other variables that deserve consideration.
Myth #4: Financing is impossible
Securing the funds to buy a parcel of commercial real estate is challenging but doable. Lenders examine various factors, including creditworthiness, before making a decision. If traditional banking options are unworkable, alternative financing may provide a solution.
Myth #5: It requires a large down payment
Although commercial real estate often involves higher down payments than residential properties, the amount is not necessarily unreasonable. The specific figure will vary depending on the lender and type of property. With a Small Business Administration loan, the initial layout could be as low as 10%.
Although buying commercial real estate comes with risks, many fears are untrue. It is possible to feel even more comfortable when you can separate what is true from what is not.