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How to Make Money on Commercial Real Estate

November 27th, 2013

thestreet.com – Rick Kahler

Want a good way to build wealth? Own commercial real estate. But only if you are willing to undertake due diligence that may not be readily available online, make a big hands-on commitment to mind the investment and exercise enormous patience.

Real estate is one of the largest asset classes in the world. The family home is the largest asset many middle-class Americans own. And real estate makes up a significant portion of the net worth of many wealth accumulators.

Directly owning real estate is not an investment for the faint of heart, the armchair investor or the uneducated. Most wealth accumulators do well to leave direct ownership of real estate to the pros and invest in real estate investment trusts instead.

Still, the lure of investing in a tangible asset such as real estate is enticing for high-risk tolerant investors who need a sense of control and interaction with their investments. If you are among them, here are a few guidelines that may keep you on a profitable path:

1. Don’t try to buy investment real estate without the help of a commercial property specialist who is a fiduciary, bound to look out for your best interest. Engage a Certified Commercial Investment Member with years of training and experience in analyzing and acquiring investment real estate to advise you. To find a CCIM near you, go to ccim.com and look under the “networking” tab, where you click on “find a professional.”

2. The broker you work with should be a member of the National Association of Realtors, which has a code of ethics. You must get a disclosure agreement that tells you who the Realtor represents. Be sure the Realtor you engage represents you and not the seller or both parties.

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