Starting out in commercial real estate can be challenging, but the rewards are significantly greater than with residential properties. However, selling commercial property is much different than residential real estate and requires a different approach. The following six tips are to help you get started in your endeavor. Using this information, you’ll be better prepared for what’s in store in the complex, but rewarding business real estate market.

1. Know Your Market

The more you know about a specific market or region, the better you can tailor your sales strategy. Additionally, you want to learn as much about your potential commercial investments before committing. Ask yourself whether you think the business can generate value for your property. Knowing your market means understanding the risks.

2. Understand Commercial Property Valuation

Unlike residential property, commercial real estate is valued by the cash flow generated by the businesses in the location. Therefore, two spaces in the same neighborhood with the same square footage can have drastically different values depending on the revenue of the occupants.

3. Learn Basic Investment Formulas

Like any investment, holding commercial property involves risk. Before taking on any holdings, be sure to calculate basic loan-to-value ratios and other investment formulas to account for risk. If needed, seek the guidance of a professional investment planner.

4. Diversify Your Holdings

As you transition into the commercial real estate market, you don’t want to abandon your residential properties. In fact, maintaining a diverse portfolio of real estate holdings can help you maximize market cycles. Often, when commercial sales slump, residential real estate may be flourishing.

5. Evaluate Long Term Impacts

Investing in commercial property is not a short-term game. In order to make smart investments, you need to consider the direction of the market for the coming years ahead. Though the latest trends may indicate a boom in a certain sector, that doesn’t necessarily mean it will last.

6. Practice Patience

Lastly, patience is essential when investing in commercial real estate. Even if you’re eager to invest, sometimes the timing simply isn’t right. The key to a successful real estate venture is knowing both where and when to invest. At times, it’s best to simply wait it out for better prospects or move on to a different sector.

Investing in commercial property can be a great way to boost your revenue. However, you must consider the risks carefully and know your market before you invest a single cent. When you do your research, you can become a smarter, more successful investor.