How Much Harder is Wholesaling Commercial Real Estate?
Many real estate investors hold back from wholesaling commercial real estate because others tell them it is much more complicated and what they don’t know can make it seem much harder to do than flipping single family houses. So how much harder is commercial property to wholesale and is it worth it?
Those that have actually done it and have successfully closed deals on office buildings, retail stores and multifamily apartment buildings may not describe it as being as difficult as those that haven’t.
In fact experienced professionals might say that believing wholesaling commercial real estate is harder is a widespread misconception spread by those that have never really done it.
It is different, but that doesn’t necessarily mean that it is any harder than residential. In fact many find it easier and more profitable. Think about it; if you have your ducks in a row, it is about the same amount of work, but often comes with a bigger payday.
It can be daunting to dive into if you don’t know what you are doing or how it is different, but with the right knowledge wholesaling commercial property can be great addition to your strategy. After all, it probably isn’t much different to approaching your first single family property deal. You weren’t born with that knowledge; you found out where to get the education and gained a lot of experience by getting your hands dirty.
So first off, don’t be afraid of the unknown. You do want to learn the differences, the pitfalls to watch out for and how to flip these properties profitably but being afraid of not knowing itself is much like being afraid of the dark. Just turn the light on and check under the bed and you’ll be fine.
It mechanically works just the same in terms of contracts and flipping. The forms might look a little different, and the properties may be bigger, but you may find it is a lot easier than you thought once you get into it.
The biggest difference is perhaps having the buyers, and is where many get discouraged and why they aren’t wholesaling commercial real estate full time. Then again, you probably didn’t start with a huge residential home buyers list either.
The due diligence can be a little different, including methods of evaluation and appraisals, environmental reports and leases, but it’s not rocket science.
Financing is also different, but in many ways commercial mortgage financing is far friendlier to investors than residential. Underwriters say commercial lending is already loosening up, loan decisions are more focused on the property, not just the individual’s ability to repay and creative structuring is actually encouraged, rather than made illegal.
Where many do get stuck is dealing with dreamers that have no idea what they are doing, those that are parts of long chains and the deal never gets done. Deal with real buyers and sellers, find sound deals and you’ll find a way to make it happen.
You might even end up preferring it and those going from commercial to residential may find the transition much tougher than you breaking into it the other way around.
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