What is best way to LOOK at a COMMERCIAL Property ?

I have Residnetial background, and now interested in commercial property.
I have appt to preview property. What is the TYPICAL process at looking at Commercial Properties ?


1a) Do general walkthough, get some details, decide if its worthwhile, then
1b) Schedule a 2nd WALKTHROUGH with a contractor or PropertyInspector to determine defects and improvements needed ?

or have a Contractor or PropertyInspector with you on the 1st visit ?


If I were considering a MFH property, I’d have to look at the numbers. You need to have an idea of the profitability on paper before you walk the place. It’d be difficult to make a legitimate offer (from the buyers point of view) without knowing the numbers inside and out. Your offer will be determined by the income the property creates.

I never look at real estate until I have a bite on an offer. 

Always remember the 3 most important things in real estate.

  1. the numbers

  2. the numbers

  3. the numbers

In all actuallity do you really care what it looks like. I don’t
I am only interested in the net net in my pocket CASH flow. I don’t even care what the profit is I can adjust that to whatever I need.

The way I do it is send a property inspector first. If there is no major problems ( needing a contractor is for me a MAJOR PROBLEM) I send out one of my property managers and she tells me what is needed to put our customers in the units. If the numbers work we move forward. If the numbers don’t work we renogotiate. I have bought buidings ive never seen the insides of. My ultimate goal is to actually forget I even own them.

hi Deep
that’s really smart…
how do you find a good property inspector that’s reliable and tell you the info like it is ?

ask around. I normaly ask first my lenders because in commercial they are your partners and they want your business to be a success as much as you do , who is actually putting up most of the money anyway. Second I ask my property manager’s. They are the ones that are going to have to listen to the tennants complaining about the building needs such and such.

Be careful of the advice you get from realtors and mortgage brockers. They are happy to be your partner when the deal is happening but then when they get paid they are long gone and don’t remember you. The lenders and your property managers on the other hand have to work with you when the deal pans out so they will tend to do what is in your best interest. The next time you find a KILLER DEAL you just have to have and your lenders see it and say this deal does not look so great listen to them. The reason they know a good deal from a bad deal is they know THE NUMBERS. They will show you on paper why mathmatically a building does not pencil out.

you have real deep knowledge…
this is alot of great info…i wish i have a friend like you :slight_smile:

btw, how much is a typical fee that a property inspector charges ?

i usually dont trust property management …i m scared to sign a contract with them and they dont help me look for tenant…how do you handle this worry ?

The least ive paid was 150.00 for a house and the most I paid was 1,800 for a pretty large multi unit.

Mabye where you live property management means something different than where I am (Cali). My managers are supposed to do EVERYTHING for the property, I mean all I have to do is pull the monthley statement out of the mail box, they even deposit the procceds into my bank account and send the tax papers to my accounting firm. I find most managers whant very little to do with there owners simply because they get to manage in a systematic uniform manner witch makes things better for everyone.

Try interveiwing some property managers that are CCIM members I think they are probably the cream of the crop. You do have to tell them what you really want though. I would want managers to handle everything. Also it is always best to pay them a % of the gross rent instead of a flat fee. I found things were taken care of alot faster that way.

I find there is another good reason for this style of hands off ownership, it forces me to be very careful about what I buy. I know that I can’t make mistakes as far as paying to much, that I will not have the cushion of “oh well I’ll just do it myself & save the money” . I honestly can’t tell you about any horror stories ive had because of this style of running things like a true bussines.

I totally agree with you. Owning an invsetment property is similar to running a business. With any business, one needs to treat it like a business not a love affair.