Real Estate is a hot business right now. Actually, it is a hot business all the time. You just have to know where the hot spots are. It doesn’t matter if it is a buyer’s market or a seller’s market. It is always your time to shine. The same is true for trading and investing. Bull market, bear market? It doesn’t matter. If you know what you’re doing, it is always your market. If you are the kind of business person who can only make money when the situation is perfect, you are never going to make money. There will always be something keeping the situation from being perfect.
If you are thinking about getting into the real estate business and want to know which side of the market, commercial or residential, will make you money, the answer is always both and neither. You can strike it rich with either, or you can lose your shirt with either. When you grow your business large enough, you will be in a position to do both. But in the beginning, it is best to choose. Here are some factors that should help you make that choice:
Initial Investment of Money, Time, and Effort
How do you plan to sell your real estate? If you intend to do a major marketing blitz and run with the big dogs, you will want to get a commercial broker’s license and be prepared to do a lot of up front investment. If you are doing wholesale real estate for residential, you can get in very quickly with no license and little cash.
For the wholesale option, you will need very little knowledge that you can’t find in the article, Virtual Wholesaling: How To Flip Houses From Home. This is the kind of guide that gives you all the answers to the initial questions you will have. Don’t think of it as too good to be true. Think of it as making real estate more accessible for more people. That is something very much needed in these present times. That is not to say that you should not look into commercial real estate. It is just to say that if you are looking for an entry point with a generous on-ramp, residential wholesaling is more accessible. If you have no experience at all look into ways to jumpstart your real estate skills.
Commercial Opportunities Are Plentiful
Due to the pandemic, there is suddenly a lot of activity in commercial real estate. Former Macy’s stores are not the only opportunities out there right now. There is a lot of turnover in the commercial space. Many businesses were forced to close for good. And while it was not good for them, it might be opportune for someone else. There will be many motivated sellers who are looking for a way out that doesn’t bankrupt them
These same market forces are also in play in the residential space. But because of the nature of the beast, the opportunity in commercial is even greater. The properties are much bigger and costly. With that higher cost comes the potential to factor in a much greater commission or fee. Residential fees are in the thousands to tens of thousands. Commercial fees easily soar into 6 and even 7 digits. That’s a lot of digits. Just don’t expect to get that money for nothing. A lot of very big and well-financed players are in the game. You will need a lot more preparation to do well in commercial real estate. But the rewards are worth it.
The Long Close
If you are going into commercial real estate, you are going to have to be good at the long close. There are many strategies for closing a sale. But you have to recognize that different strategies are effective in different situations. A strategy intended for a one call close will not work for a sale that takes a lot of time and many touch points. Commercial sales require you to close a deal over a longer period of time. So don’t bring your short close expectations to a long close deal.
When it comes to commercial versus residential, there is no right or wrong. Just remember that commercial takes a lot more setup, has a larger potential upside, and takes a much longer close.