Looking to invest in small commercial - where do I start?

[Andrew Del Monte]

Greetings! Currently only investing in stocks and mutual funds but eager to learn more about investing in small commercial properties. I would like to own a property that I can pass down to my family for long-term income. What advice do you have for 1st time RE investors to learn more?

[Jai Reddy]

Yes, start local. When you say commercial, what space? Shopping centers, single-tenant buildings, apartment complexes, office, warehouse, etc. One aspect I've seen in the buying/selling of commercial properties - they are all overpriced. Unlike residential SFHs, the current owners are all in it for the return on investment and are looking to maximize their exit. So, negotiate hard, but bring the ability to Close on a deal to the table (have financing lined up, etc.)

As for metrics, begin to calculate the Cap Rate of the property. What you pay for the property should be based on actual cap rate, and not pro-forma cap rate.