Real estate has become increasingly popular among investors, especially in Canada, where Jordan Fletcher runs a successful commercial real estate company in southern Ontario.
It’s a competitive area, and Jordan Fletcher has developed many successful projects as President of Gorge Holdings Inc. by leveraging his experience and knowledge of the area.
Many people are now considering investment opportunities in commercial real estate, likely because it offers higher ROI compared to many investments in residential real estate. However, there can also be more risks with commercial real estate.
If you’re considering commercial real estate investment, Fletcher has offered a few pro tips for how to get started and ensure success in the long run.
Learn Your Market
While it might be tempting to jump at the first opportunity that comes your way, it’s important to gain a big-picture understanding of your real estate marketplace.
Try to get in touch with other commercial real estate investors who already have some experience. Talk to local realtors and learn what the average prices and interest rates are for properties similar to what you’re looking for. An experienced realtor can help you evaluate specific properties and answer the questions you have — “and also suggest questions you didn’t know to ask,” Fletcher said.
There are often relevant regulations that you might not be aware of, or hidden costs that only veteran realtors and investors will know. Try to build some connections with these people before making any big decisions about where to put your money.
Learn The Jargon
Most fields of expertise come with their own language, and real estate is notorious for this. Even an investor with lots of experience in other industries will often find themselves confused by the jargon of realtors, Fletcher said.
That means you should get acquainted with at least the important terminology, including things like:
- Cap rate
- Gross/net operating income
- Appreciation potential
- Cost of occupancy
There’s a great dictionary of these terms available on Hubspot.
Research The Background
Research is key for any kind of real estate investment, Jordan Fletcher said.
You’ll want to collect as much information as possible about other property sales in the vicinity, which can provide reliable data about the long-term value and potential of the property. Zillow has become a vital tool for realtors and investors, empowering them with well-sourced information about properties bought, sold, or leased within a specific area.
In addition, Fletcher said, you’ll want to check the property’s permit data, which is usually available online, but can also be found at whatever municipal office handles that information. Other helpful information could include the local deeds registry for check for liens, the sales deed, receipts on the property’s taxes, and the building’s approval plan.
Do The Math
Banks and private money lenders can advise you on a smart budget and verify what loans might be available.
If you end up needing a loan, it’s more likely to be approved if you’re prepared with financial statements and documented evidence of how the property will generate profit — and how much that amounts to over time. Investing in commercial real estate is both costly and time consuming, at least when done correctly. Of all attributes among successful investors in commercial real estate, “patience is probably the most important,” Jordan Fletcher added.