A major proportion of commercial real estate transactions are happening off-market today and there’s a good reason why.
Finding and buying properties off-market has more benefits than its limitations and thus, it’s gaining great momentum, helping thousands of commercial real estate investors to maximize their profits.
Now, if you are a beginner to the world of commercial real estate investing, you might probably think that the best way to find commercial real estate bridge loan properties that will perfect your needs would be to run an online search or to get in touch with real estate agents or agencies.
Whilst you’re not wrong in thinking so, you should note that there are hundreds of properties out there which are not even listed on these sites or have not been brought to the light of real estate agents.
That is what we’re talking about today. Here’s all you need to know about Off-Market Commercial Real Estate Properties and how you can find them, along with knowing why they make one of the best ways of buying the perfect property that will suit your needs, whether you are an investor, real estate agent, or a broker. Let’s dive right in then.
What are Off-Market Commercial Real Estate Properties?
Off-Market Commercial Real Estate Properties are real estate properties that are not listed for sale, either on online portals or even on boards or hoardings.
It is very easy to confuse the term Off-Market Commercial Real Estate Properties to be those properties which are not listed on online platforms.
While it is true that these properties are not listed on online websites, it’s not the only defining rule. There are properties that the owners might not be actively trying to sell but are willing to sell.
Hence, it is very possible that you will not find any kind of advertisements for these properties, but you’ll become aware of these only when you have a direct talk with the property owners.
Put it simply, some off-market property owners are not even thinking of selling their properties anytime soon but they’re open for offers from their buyers and if you can convince the seller to sell the properties, you might just end up taking home a great real estate deal!
What are the major differences between On-Market and Off-Market Commercial Real Estate Properties?
On-Market properties are the properties that are publicly listed for sale on commercial real estate properties listing websites.
They are either put up by the owners of the properties or the brokers at any given price point. These owners are actively looking to sell their properties and thus, they get quite aggressive with their advertising and marketing campaigns to sell their properties off.
Off-Market Commercial Real Estate Properties, on the other hand, are NOT publicly listed for sale, neither on websites nor on hoardings or boards.
The owners of these properties want to sell their properties at some-point-of-time but they aren’t actively looking to sell. In other words, the potentially interested buyers of these properties are required to approach the owners and convince them to sell their properties. So, in this case, it is the buyers who are aggressive with putting the pitch forth the sellers and not the other way around.
Bottom-line?
The United States has more than 50 million Commercial properties. The online commercial real estate properties listing websites barely advertise about 1% of the properties that are on sale.
This leaves a whopping majority of the properties under the Off-Market Commercial Real Estate Properties list and that’s why one cannot make the best decision about choosing the right kind of commercial investment property without considering the large majority of Off-Market Commercial Real Estate Properties.
How to find the best Off-Market Commercial Real Estate Properties?
Although a majority of the commercial properties in the US fall under the category of Off-Market Commercial Real Estate Properties, it might not be the easiest thing to find the right kind of property that will perfect your needs.
These properties are hidden in masks, and you might not even know that a property you had your eyes on last week in your friend’s neighborhood is actually a property that the owners intend to sell soon.
So, finding the best Off-Market Commercial Real Estate Properties can get tricky. Nonetheless, here’s how you can simplify the process:
1) Check out the websites that do give an idea about major Off-Market Commercial Real Estate Properties
Now, this might sound contrary to the idea of Off-Market Commercial Real Estate Properties but yes, there are websites that list some Off-Market Commercial Real Estate Properties.
These websites might not provide you all the details about the property, and sometimes might not even precisely tell you if or not the owner intends to sell, but they will give you a bare idea about the properties that “might-be-on-sale” and you need to figure out how to do the rest of the job.
In other words, these websites put across the database of all the commercial real estate properties in a particular location where the owners have NOT shown any clear indications of NOT selling their properties. Remember the rule of elimination?
Yes, that’s pretty much how it works. All the commercial properties in a particular location minus the properties where the owners have clear intentions of NOT selling them, and you’re left with Commercial properties that might be on sale.
Moving ahead, these websites also use a couple of other statistics like previous owner histories, number of times the property has been flipped from the past so many years, the average tenant occupancy rate of the property, the market value of the property and so on to further narrow down the list of commercial properties which could be on sale.
2) Make a list of the properties you have liked and started the conversation with their respective owners
The websites’ services will usually end at providing you with the list of properties and the contact details of the owners.
They often provide the contact addresses like phone numbers, pin codes or mail addresses of the owners and if you like any property on the list, you can take the process ahead by directly getting in touch with the owners of the property.
Many real estate investors begin by starting the conversation with 5 to 6 owners simultaneously and try to figure out what’s the best deal for them. You need to ask a couple of important questions like:
- Why is the owner willing to sell the property?
- What is the sale price he’d be happy to work with?
- Will there be needed any major repairs and renovations to the property in order to make it more functional?
- Are there any other interested buyers who’re willing to negotiate with the owner?
- What are the rates at which similar properties in the locations being valued at and how much you’re willing to pay?
After having started the conversation and getting answers to all your probable questions, you need to further narrow down the list of commercial properties.
3) Proposing a good deal to the owner
Remember that not all owners of Off-Market Commercial Real Estate Properties are looking to sell their properties immediately. It might require you to put in some efforts in convincing the owners to make a decision of selling.
And moving further, you’ll have to work out a deal that the owner will be happy to work at. The next part is on you where you’ll have to convince the owner to sell their property to you and proposing a good deal to them.
Now, note that proposing a deal and negotiation with the owners of Off-Market Commercial Real Estate Properties is very different than that of listed properties because – the latter is aggressive with their intention of selling and you have the benefit of desperation but with the owners of Off-Market Commercial Real Estate Properties, you do not have that benefit and hence you’ll have to actually work out the deal that interests them.
So, you might have to work out some really steep prices but if you think it’s worth it, and if you have a solid plan in place through which you’re going to ensure that you capitalize on this deal optimally, then, there’s nothing like it!
They are the three steps through which you can find the best Off-Market Commercial Real Estate Properties. The key to finding THE best deal, however, lies largely on your research skills and how well you can propose a value proposition deal to the owner.
Some real estate investors end up overpaying for the property and regret the decision later. In order to prevent that from happening, your best resort would be to work out a deal that secures the interests of both the parties involved and never cut down on a price that’s way too steep for you.
Always remember that the end goal of real estate investing is to have a profitable deal and do not get carried away by the delusional sales pitch proposed by the owners of Off-Market Commercial Real Estate Properties, especially because they’re not trying to immediately sell their properties.
Remember to always explore a wide variety of options you have got before locking in on that one perfect deal. If you get this right, greater chances are that you will strike great deals!
Why Should You Invest in Off-Market Commercial Properties?
Discovering off-market commercial real estate can give investors access to better offers. These offers are better than those currently on the market. Investors may be able to access unique, sought-after homes. They can make agreements that benefit both the present owner and themselves.
These are insider deals for the savvy enough to uncover them. Finding one is, of course, the critical part.
Advantages that off-market commercial properties Private Capital Investors may offer.
Buying off-market commercial real estate has several advantages. Among the benefits that they offer include:
Get Exclusive Offers
Not all of the most sought-after houses ever come up for sale. Having access to these off-market transactions can make a portfolio much more impressive.
Reduced Rivalry
Other investors will only make buy offers if they know a property is off-market. When negotiating the conditions of a sale, less competition may be advantageous.
Cut Down on Fees
Sometimes, off-market real estate deals can be without the seller’s agent. This lowers the commissions that must be paid. Real estate transactions often involve seven or eight figures. So, even a tiny cost decrease can lead to significant savings.
Agreement Framework
Many owners may not have even considered selling their assets. This enables purchasers to customize the offer and its structure. A deal’s structure might change in talks, but how an offer is presented at first can influence the conversation.
Confidentiality
Frequently, these transactions can be carried out discreetly, away from prying eyes. For most, this is a minor point. But it might help sellers (or buyers). They are not advertising a property transfer for personal or professional reasons.
