Commercial real estate is a wonderful, exciting business that can offer a wealth of opportunity for those who look for it! Many people hesitate to enter such a market as commercial real estate for many reasons. There are some major misconceptions about commercial real estate, which I am going to address here.

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Location is Not the Only Factor

Many people who hear about commercial real estate but aren’t necessarily in the business often use the expression “Location, location, location!” Many people associate this expression with the truth that a property’s three most important attributes are “Location, location, location!”

I am here to tell you that this is not the case! Now, I am not going to say that location is not important, but what if you have a beautiful location for a mountain resort, complete with snowy hills, a perfect location for a lodge, and beautiful mountain views? You want to improve the property for a weekend getaway for romantic couples with a beautiful lodge, resort, luxury-type housing, and perhaps some individual cottages overlooking the green forest. Sounds great, right?

The perfect location- you can’t beat it! But you learn that the zoning for this property is residential, R1, to be exact. The use is only one single-family residence per acre, and no commercial property is allowed. What happened to your “Location, location, location?” It flew out the window!

The Importance of Zoning

The most important aspect of a property is its use. What is it intended for by designation of the city or county? It does not matter where the property is if you cannot get the zoning that is in the realm of your intended use.

It is possible to get properties rezoned, especially as cities change and grow. Be sure to consult with the city or county to determine if these changes are even possible because you do not want to buy a property that you cannot rezone and be left with an unprofitable property on your hands.

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Debunking the Myth of Complexity

Most people believe that commercial real estate is complicated and that you need special education or know-how to succeed in the business. Many think that commercial real estate is filled with international finance, heavy and complicated math, complicated tax rules, and forms and applications that are just too complicated to understand correctly.

I am happy to tell you this misconception is the worst because it puts a roadblock in front of many people’s aspirations to become a commercial real estate insider. Let me put this misconception to rest. There is math involved, and most of it is not at all complicated: simple ratios, adding, subtracting, and multiplying. What is even better is that you don’t have to do the math.

Others can do that for you. The same is true with property management, inspecting the property, and doing the year-end tax report. Commercial real estate is less complicated than residential real estate because you can focus your energies on a single deal that will be worth perhaps 10, 20, or even 50 residential deals and more!

Focusing on Your Core Strengths

Let me put it into perspective for you. If you owned a business (many of you may), would you create strategies, keep the books, manage the many locations, sell on the front floor, and take out the trash after the day was over? I think not! Commercial real estate is made up of many people who are there to help you with whatever you need. You must position yourself as a real estate insider, which is a leader in the business.

The Myth of Intensive Management

Another misconception is that commercial real estate is management intensive and that you must manage every property you own. Let me tell you, when you end up owning 10 or more properties, this is almost impossible to do! You do not have to manage your properties yourself, so you can concentrate on creating more deals. Hire a company or set a team in place to take care of this “day-to-day” business.

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Conclusion

As you can see, what is passed around in dialogue about commercial real estate is not always true. Before you take everything to heart, be sure to get your facts straight. Many people in this profession speak about commercial real estate as a business in which only the savvy and sophisticated can succeed. They often act this way because they want to keep people out of the market by differentiating themselves. If you were in this position, you would, too!