Wholesaling Commercial Real Estate: Exciting Opportunities in 2013

Why should investors consider wholesaling commercial real estate in 2013?

How is the commercial real estate market changing right now, what’s different about it for those used to investing in single families and where are the best opportunities to realize the biggest and fastest profits from flipping apartment, office, industrial and retail buildings?

Why Embrace Wholesaling Commercial Real Estate This Year?

Commercial real estate may have fallen later than residential when the bubble burst, so it has also taken a little longer to bounce back. However, the general consensus is that the commercial market has now hit bottom, has concreted a new foundation to build on and is set to begin growing again.

Economic growth may not be moving its fastest right now but there are many factors at work propelling the commercial property market. New startups are grabbing space to launch, large existing corporations are looking to relocate in a big way now that they are no longer tethered to old fortresses by a lack of technology and talent and global investors are prepping to plow masses of capital into commercial properties and commercial mortgage backed securities.

This means demand is increasing and the amount investors and businesses are willing to pay for space is on the rise too, especially as they rush to lock in yields before interest rates rise and cap rates dwindle. At the same time mortgage lenders are likely to speed up foreclosures on these properties as demand increases and values head up. This creates the perfect conditions for wholesaling commercial real estate for fast and sizable profits.

What’s Different?

There are three major differences in wholesaling commercial real estate versus single family homes:

1. Financing

Commercial mortgages are completely different to residential. Thankfully this also means that they are a lot easier to get today and rely a lot more on the property than the individual buyer. Underwriting for these loans is also softening up, just as it is becoming tougher for residential investors.

2. Due Diligence

The due diligence is a little different too. The factors which need to be looked at are slightly different and so are lender requirements including appraisals, environmental reports and rent rolls. Know the difference and the timing and you’ll do fine.

3. Marketing

Obviously diving into office, multifamily, retail or industrial property means marketing to a different demographic than individual homes. Recognize this, get to know what they want and what is important to them, as well as which marketing mediums as the best for reaching them.

Where to Invest

While wholesaling commercial real estate in San Francisco, Manhattan or Miami’s Brickell might sound cool, the market is undergoing major shifts.

These old strongholds are no longer as critical for business success as they used to be and organizations are increasingly choosing to look to secondary markets for housing their businesses and this is where much of the best spreads will be found.

Look for non-performing loans, distressed properties, distressed tenants, disparity in and low rents, internet speeds, government initiatives promoting various locations and proximity to large business and transport hubs.

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