How to analyze commercial properties area

Question

What are the rules of thumb to analyze a commercial property? How you analyze the neighborhood? I am a still new to this sector, I would love to hear all types of opinion. Thanks

Danilo

Ronald Rohde · Answer

I don't care much about neighborhood. Its about 8 or 9 on a list of 12 factors.

I care about zoning, current lease rates, market rates, debt cost, condition/age of building.

Drago Stanimirovic · Answer

Hey Danilo,

For commercial, focus on a few basics:

Cap rate = NOI ÷ price → aim for 6–10%.
DSCR = NOI ÷ debt payments — 1.2+ is solid.
For the area, look for strong traffic, anchor stores, low vacancy, and local income levels. Tools like Google Maps, LoopNet, and city planning sites help.

Commercial is numbers-driven, but once you get the hang of it, it’s a great lane. Let me know if you want help analyzing a deal or setting up financing.

Matthew Masoud · Answer

Depends on the asset class:

Retail - Traffic counts >15k on direct road, population density >7,000 1mi raidus

Multifamily - Household income >$50k, population density >10,000 1 mi, jobs (harder to quantify).

Industrial - Harder to have rules of thumb for area but be careful of lots of vacant land surrounding it or lots of new builds in the area. Industrial is easy to build to overbuilding is a real threat. You want 16ft+ Ceiling height and 3 phase. More dock doors the better.

Office - Don't do it.

PM me if you want to go into deeper details on any of these. Bought them all except for office.

Luis Maqueira · Answer

Ok, let me give you a totally different approach.
You want to invest in real estate? Great.

This isn’t like buying a car—we're talking about a few hundred thousand dollars or more.

Option 1: Find a Realtor—a good one—who understands investing or at least gets your goals. But remember: they only get paid if you buy, so you better know more than they do. Realtors are trained to sell, not to invest. I know—I’ve had my license for over 15 years. It’s the best job ever: you make people happy, and you get paid for it.

As a buyer, you are protected. The bank won’t let you overpay for a property. They don’t rely on the Realtor’s opinion—they use their own valuation system to protect their money.

Option 2: Go learn, learn, learn. Hop on Zillow, choose your area, and filter for “For Sale by Owner.” And good luck getting advice from the seller. His P&L might look a little too good—and so might his cap rate. But hey, it’s still an option. Just know it’s a lot of work. You’ll need to learn how to underwrite deals really well, especially if it’s your first one.

Option 3: Hire a professional to do it for you. Pay them a fee for the work—not a commission. Maybe even offer a bonus once you know you’ve landed a great deal.

When you need to file taxes, you hire a good accountant. If your car breaks down, you find a good mechanic. Real estate—especially commercial—is not “Buying Houses 101.” You need experience, knowledge, and strong relationships with everyone involved in the process.

So why would you think the best move is to find an agent and make them work for free until they finally sell you something?

Truth is, good agents already have serious, ready-to-buy investors. They can’t gamble their time on someone doing their first deal. Financing, decision-making, timelines—there are so many factors to work through before you can close on a building.

But if you pay a fee, now they’re working for you—not trying to sell to you. They’re your consultant. They have to educate you, guide you, and help you find the right property.

In the end, you walk away with knowledge, experience, and a solid investment—and hopefully, a new, profitable relationship that continues to make you money as you grow into the investor you want to be.

If you like the idea Message me I send you the ones I know are good and I used the last past years.

Luis Maqueira MMP

Henry Clark · Answer

OP   There are a million potential items to check off.  Recommend you go to Loopnet in your area for a type of commercial property you might be interested.  Post in on here and ask what types of concerns, considerations, people would have.  Develop your checklist.  Do about 5 of these and also Deal Analysis on each.  After you have done that read the books, watch the commercial podcasts, talk with area Commercial Agents, etc.

How to analyze commercial properties area

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