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Investing in commercial real estate often starts with online marketplaces to find listings. But to navigate these marketplaces effectively, you need the right strategy.
With these 10 simple tips, you’ll have a better understanding of how to efficiently navigate online marketplaces to create a strong portfolio of income-generating properties.
1. Avoid marketplaces that do one-time data dumps.
Commercial real estate is largely done at the local level, but real estate investors need to be able to find listings nationwide all in one place. In many online platforms, the data comes in from a one-time import with very little interaction from the listing broker afterward. This leads to needless time spent searching through outdated and inaccurate property listings.
When choosing a marketplace, timeliness and accuracy of information is paramount. Seek out a platform that brings in listings from local-market platforms where brokers are personally verifying the data they share with other brokers on a scheduled and ongoing basis.
By ensuring the platform you choose isn’t aggregating data from anywhere and everywhere, you’re more likely to view listings that are up-to-date and accurate.
2. Use built-in property evaluation tools.
There are a lot of data points that CRE investors can access and utilize to evaluate the suitability of a property. So many, in fact, that piecing it all together can become overwhelming. To simplify the initial property search process, find a listings provider that gives you built-in tools and use them to their full potential to evaluate a property without leaving your desk. Using tools like this can give an investor a quick overview that helps them decide whether to pursue further.
3. Choose a marketplace that doesn’t charge brokers per listing.
If you are using a marketplace that charges a fee for each post, you will inevitably see far fewer listings.
Consider this from the broker’s perspective: If you are charged a fee for each listing, you will be more selective with what you post on the marketplace. If brokers are able to post unlimited listings without financial limitations, you will more likely find a complete database of active listings in a market.
4. Consider opportunity zones.
The location of your property is crucial to your financial success, and you need to target properties located in areas that give you reliable opportunities for profit. Many investors are turning to opportunity zones for investment tax benefits. Use your online marketplace to easily target properties located within these government-designated zones.
5. Look for intuitive navigation and organized data.
With so many different data points, it’s far too easy to get lost in the process of accessing and organizing information. It should be easy for you to navigate the desired information and organize it in a fashion that is clear and intuitive.
Information should include detailed photos of the property, the number of units, the year it was built, its square footage, the number of floors, its building classification and other information used to assess a property’s potential.
6. Look for property-centric listings to save time and money.
On a property-centric platform, all listing and transaction details — past and present — are tied to a central property record and its underlying parcels. This has several advantages over a listing-centric model, including the ability to get a holistic view of a property and the market in one spot. This provides access to such information as parcels lines, ownership data, tax data, demographics, building characteristics, available space and historical data.
7. Search verified listings.
One of the top challenges of using an online marketplace for locating potential assets is knowing whether a listing is current and up-to-date or it has expired. With potentially millions of listings, it’s easy for properties to remain active on a site even if they have already been sold.
To reduce wasted time and energy, make sure you are using a program with listings that are actively verified by brokers and kept current through a specific process.
8. Have a search radius and use it to focus your navigation.
To ensure maximum efficiency for your search, make sure to search properties within set geographical parameters, whether a radius or a polygon search.
For example, you may want to search for properties along a two-mile stretch of a certain interstate corridor. Entering a radius or drawing an area will give your search focus and precision and keep you from having to shuffle through hundreds of properties outside your desired area.
9. Use marketplaces specific to commercial real estate.
Online marketplaces come in a variety of forms, with broad ranges in quality, scope, data and sophistication. To help you have an effective search, it’s best to stay with online marketplaces that are focused specifically on commercial real estate. These will be designed for the exact needs of CRE investors, giving you the best chance at finding a property that’s right for you.
10. Scrutinize who built the marketplace.
Businesses and organizations succeed based on the strength of those who created it. For commercial real estate marketplaces, it’s essential that the team who powers the marketplace fully understands the fundamentals of commercial real estate.
You should scrutinize a CRE investment platform with the same level of detail that you apply to any real estate organization or partner. They should be experienced in the field, understand the needs of investors and have a proven track record for leveraging this expertise to your advantage.