Real Estate

Commercial property for sale – how to find it

Finding commercial property for sale is not easy. When you’re looking for residential property, you can just look on Zillow. But commercial property isn’t as openly advertised as residential, with most deals going through brokers. You can find commercial property on Loopnet, but often, really good deals are placed by brokers with their regular clients and never come on the market. (Loopnet has sometimes been called “where bad deals go to die”.)

Time and effort is required

So to find good commercial property for sale, you’ll need to invest more time and effort. Creating a good professional network is often the best way to get into the market; get to know realtors, real estate attorneys, and other real estate investors, or join an investment club. If you are the kind of person who can give a broker a quick yes/no answer, you’ll find they are willing to put interesting deals in front of you. Even better, if a deal is a “no,” tell them why. (Was it the price, the neighborhood, or too much work to be done on the property?)

Try a direct approach

For some kinds of commercial property, a direct approach can work. For instance, many self store facilities are still privately owned. Chatting to the owner, you can ask “Did you ever think about selling?” Owners coming up to retirement might be happy to do a deal rather than go through the hassle of listing the property and the cost of paying a broker. But that won’t work with office buildings, usually owned by institutions and large partnerships.

You could also look into crowdfunding sites, which vary from those offering portfolio investments of $500 or so at the bottom end, all the way up to sites offering access to multi million dollar deals with a minimum $100,000 or even $250,000 in-price. At the top end, you’re talking about individual investments which will need a good deal of due diligence on your part. You need to check up not just on the property itself but also on the way in which returns from that property will be distributed. But with that misgiving, this can be an interesting way to invest in commercial real estate.

Or look on the stock exchange

However, there’s one place where commercial property is always on sale, easy to find, and often selling at a discount to its market value. It’s an incredible place to look for good commercial real estate investments, and most real estate gurus don’t even mention it. It’s called the stock market!

REITs were set up as a way of enabling individual investors to put money into commercial property. Publicly traded REITs are transparent, because they have to submit full SEC filings, and they invest in a wide range of both commercial and residential properties. You can select a specialized REIT like healthcare real estate investor Physicians Realty (which has the lovely ticker DOC), or a more diversified REIT like WP Carey (WPC) or Vornado Realty Trust (VNO).

Though obviously share prices move up and down, so timing can be important, you’re never going to be up against a seller-imposed deadline or competing with another buyer. And finding REITs is as easy as trawling Yahoo Finance, Morningstar, or Bloomberg from your laptop – no need to phone around.