Posted by carlos on November 01, 2004 at 21:19:43:
I’d say you’re basically right. The SFH market is pretty organized and efficient compared to the commercial RE marketplace. For example, MLS has been around since the dark ages, but only in the last year or so has Loopnet started to get traction, and most commercial RE deals still aren’t listed by them. (Although their share is increasing steadily)
But as I said, some of the very best deals in commercial RE can be the ones you find yourself. It’s more work, to be sure, but it can well be worth it. An inefficient market can be a gold mine for someone who knows how to mine it.
What’s the best method of locating commercial real estate opportunities? I
have already done my research and have an area in mind. Besides utilizing
commercial real estate brokers, anyone else have anything that has worked
for them? Thanks again!
Here’s a few ideas: use loopnet (free web site), check out commercial real estate ads in newspapers, and visit local broker’s web sites (commercial real estate brokers, that is).
Network with people like appraisers and RE attorneys.
And you may be able to find properties the old fashioned way: drive around the area you live in and beyond. You may see some potential candidates. Focus on the ones that have good locations, but where the management isn’t doing a good job. (The building is dirty, the parking lot needs repaving, the landscape is dying, etc.) Then go to the city or county and look up the owners and contact them. Send letters letting them know you’re interested in acquiring their property.
Some combination of all of the above is sure to get you results. Keep in mind that most deals do come through brokers, but some of the best don’t.
>Keep in mind that most deals do come through brokers
Is this a way that commercial deals are different than SFH deals? Good SFH deals seem to almost never come through brokers. Aggressive pricing, high liquidity, and the broker’s commission itself practically guarantee all profit is squeezed from the deal.