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Tips for entrepreneurs joining the commercial real estate market

The commercial real estate market is booming. Entrepreneurs that are looking to join this market either individually or with a group of like-minded investors can take steps to better ensure the process goes smoothly once they find the right property for their investment purposes.

Financial backing can set you apart.

Commercial real estate transactions can require significant up-front investment. Raising funds to back a deal before moving forward with an offer will help a sale move forward smoothly, but it is not always easy. If conventional financing is planned, a preapproval letter can meet this need.

Tips to get a preapproval letter.

When dealing with a financial institution for a preapproval, these two tips can help:

  • Only as strong as the weakest link. This adage holds true when it comes to getting a loan to back a commercial real estate transaction. Lenders often review the investor group that is working to put the deal together. As noted in a recent piece by Forbes, a single member of the group with a bankruptcy or criminal record can disqualify the entire group.
  • Preparation is key. For conventionally financed acquistions, it is helpful to have a preapproval letter. This may require a personal or business balance sheet and credit report for each investor. Tax returns are also often required.

Although these tips can help your group get the financial backing it needs to move forward with a commercial real estate transaction, financial backing is only one of many considerations to take into account before jumping into the commercial real estate market. Additional considerations before completing a sale include due diligence and tax planning. An attorney experienced in this specific niche area of the law can help better ensure a smooth transition into the commercial real estate market.

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