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For tax purposes, commercial real estate is classified as investment and/or income property. It is used to generate a profit. There are four common categories:

* Retail: includes hotels, malls, shopping centers, and medical centers

* Office: includes office buildings

* Industrial: includes farm land, industrial properties, and garages

* Multifamily housing: includes all-type developments

There are three important steps to consider when preparing to purchase commercial real estate:

Step #1: Develop a Goal and a Market Plan

Searching for commercial real estate can be a laborious task. Therefore, know the type of property you want to purchase. For example, before searching for an apartment building to either invest in or purchase, study the real estate market to determine the price you are willing to pay. Apartment buildings may start at $400,000 and go as as high as $15 million and more. Determine the type of commercial property, the market, and the type of clientele before searching for properties. Narrow down the city to a specific area. Visit the area. Study it. Evaluate your goals.

Step #2: Write a Literature Review

In graduate school, students are required to develop a literature review to gain an understanding of a particular subject, text, and/or literary character. Reviewing the available literature on commercial real estate is no different. Familiarize yourself with real estate principles. Read case studies and federal and state laws on property ownership. Research websites and print out the material. Study the methods of property investment companies and draw up a draft of key points and strategies. In other words, develop your own reference source.

Step #3: Call a Real Estate Broker

Asking many questions is very important to the process of preparing for commercial real estate. There is always room for a question. That means that there is always room for an answer. You need answers. You need help from an expert.

Tips

Purchasing real estate can be long, frustrating, and intimidating. That’s why it is important to not confront this task alone. Talk to someone. Talk out your ideas. Allow someone to criticize your plan. There may be something you haven’t thought about; then, surround yourself with positive energy. The most important thing to remember is to prepare. Once you are locked into a piece of commercial real estate, it is much harder to sell it.

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