If you are new to commercial real estate investing, it is generally in your best interest to find a commercial real estate mentor. This person can help you learn more about different investing strategies, help finance large transactions or provide general advice to help you avoid making rookie mistakes. Let’s take a look at some tips for finding the right person to serve as your coach, guide and confidant.
1. Find Someone Who Shares Your Vision
Ideally, your commercial real estate mentor will be someone who shares your overall investment philosophy. For instance, if you prefer to be a passive investor, it is important to work with someone who understands how to maximize returns without having to make too many decisions.
Your mentor may highlight the benefits of hiring a property management company to find tenants, handle maintenance requests and collect the rent each month. He or she may also teach you about private placements, real estate investment trusts (REITs) and other investment options that may help to meet your needs.
If you want to be an active investor, a mentor may suggest that you buy properties close to home as they will be easier to manage. This person might also give you tips about how to improve a property without spending too much time or money doing so.
It is also important that you work with someone who has roughly the same amount of money available to invest in various properties or trusts. Doing so ensures that the advice that you receive is relevant to whatever strategy you’re trying to execute.
Regardless of what your goals, risk tolerance and timeline is, make sure that you work with someone who shares your values. If this person isn’t in the commercial real estate investing game for the same reasons that you are, he or she might not provide you with the insight that you need to be successful.
2. Look for Someone Who Is Still an Active Investor
Your mentor should be someone who still buys office buildings, multifamily homes or warehouses. While a former investor may be able to teach you about the various types of investment opportunities, this might not necessarily help you when it comes time to close on a deal.
As with anything else in life, there is a huge difference between what you learn in the classroom and what actually happens in the real world. Perhaps the biggest difference between theory and reality is the impact that your emotions can have on your ability to make the right deal.
It isn’t uncommon for newer investors to want a property so badly that they will pay more than it is worth. Furthermore, investors may buy properties without inspecting them or taking other steps to protect themselves if an unexpected problem arises. Aligning yourself with someone who regularly buys and sells commercial assets may make it easier to learn how to manage your emotions.
Additionally, working with someone who is still active in the commercial market is important because you want to work with a person who understands today’s market conditions. For example, it’s important to know that forces such as rising interest rates, a sluggish economy or societal changes in the aftermath of the coronavirus pandemic can play in making a successful investment. Only someone who is currently in the market can provide the context needed to help you determine which deals make sense and which deals don’t.
3. What Can You Bring to the Relationship?
In any successful relationship, both parties benefit from having the other in their personal or professional lives. Therefore, it is important that you are able to provide something of value to the person who is tasked with setting you up for long-term success.
For instance, an established investor may choose to work with you because of your knowledge of how younger people think about real estate. In the 21st century, small businesses have abandoned formal offices in favor of shared workspaces. These shared spaces allow individuals from various companies to network and create ideas that can help their companies flourish.
Helping your mentor understand how the market may be evolving can help that individual make better decisions about his or her portfolio. In addition to your views on modern business trends, you may be able to provide value to an established investor by offering access to social media contacts or others in your network.
It can be much easier to be a profitable commercial real estate investor if you have someone who you can lean on for support. This person may be able to help you control your emotions, anticipate changing market trends and offer other advice that can help you grow your money in a timely manner. Ideally, you will spend time talking to several prospective mentors before choosing someone to work with. Doing due diligence can maximize your chances of finding a partner who can help you fulfill your goals.
Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.