Investing in Commercial Real Estate Part 3: Understand the Players

It’s necessary to understand the players if you want to understand the game. No one can invest in commercial real estate without the assistance of experts. Finding the right people to assist in your investing activities is part of becoming successful. These experts can make the process much smoother and keep you out of trouble.

Commercial real estate investments can require more experts than simple residential investment activities:

1. Real estate brokers. Commercial real estate brokers specialize in commercial real estate. Commercial brokers tend to be more experienced and have more knowledge than the average residential broker.
2. Developers. For instance, Donald Trump is a well-known real estate developer. These are the people that start with an idea and make it happen. The person that built the apartment complex you’re considering as an investment is likely a real estate developer.

• Most developers stick with a particular type of property, such as shopping malls, resorts, or apartment buildings.
  

3. Property managers. A shopping mall, apartment complex, or large office building requires management. You may be able to manage smaller commercial properties yourself, but larger properties can require a team of people, some of which need a high level of expertise. Consider a company that specializes in providing real estate management services.
4. Direct lenders. This is the type of financial institution most of us use for our personal banking and home loans.
5. Financial Intermediaries. Commercial banks and institutions that act as intermediaries between direct lenders and investors are financial intermediaries.

Of course you still have many of the same people found in more conventional real estate transactions, though many are specialized. These include:

• Inspectors
• Insurance agents
• Appraisers
• Attorneys
• Accountants

A commercial property is a business and requires more experts than a simple home purchase transaction. Commercial real estate differs enough that a unique group of experts are necessary. Fortunately, these experts are readily available to anyone that needs their services.

“Certainly the advent of technology and electronic commerce has had an immense impact on the real estate industry.”

– Michael Oxley

Thanks for reading! Stay tuned over the next few weeks for the rest of this series, and as always, give us a holler if you want to chat about your own CRE investing journey.