For several years now, finding truly profitable commercial real estate deals has been a struggle. Sellers demanded sky-high prices, while buyers had to wrestle with soaring interest rates that made financing a challenge. But those tides are finally turning.

According to JP Morgan’s 2024 mid-year outlook, all parties – buyers, sellers, and capital providers – are now motivated to start doing deals again, even in this “higher for longer” interest rate environment. They’re ready to start making moves.

With the market energy shifting, now is prime time for real estate investors to dust off their playbooks and search for new profitable opportunities before the competition heats up. Here are 8 real estate strategies you can use to capitalize on improving market conditions and find your next profitable commercial property:

8 tips on how to find commercial real estate deals

Let’s get right into how you can find your next commercial real estate property.

1. Market research and planning

Since commercial real estate is so broad, with many geographic locations to choose from, the first step is to do some planning so you aren’t spinning your wheels in too many directions. Here’s how:

  • Identify your target market: Focus your efforts on a specific niche and geographic area where you can deeply understand market dynamics. Are you investing in retail, multifamily, industrial, or another niche? Research the latest trends impacting that sector.
  • Expand your search criteria: Don’t always stay in the same markets. If you’re a multifamily investor getting hit by all the new supply driving rents down 6.6% in places like Austin, maybe it’s time to look elsewhere. There could be other parts of the country with less competition where opportunities might be hiding.
  • Map out a plan of action: After doing your homework upfront, put together a list of locations fitting what you’re going after – those specific markets and product types in your chosen niche. Then, map out your game plan. Decide on your next key steps, such as networking in those markets, analyzing data on rental demand drivers, and establishing investment criteria.

2. Acquiring market knowledge

Commercial real estate investors can build market expertise by:

  • Learn what the insiders know: Engage the local expertise of commercial real estate brokers, property managers, appraisers, and other real estate professionals in your target markets. Their on-the-ground experience gives valuable insight into areas like tenant dynamics and pricing trends. It’s also wise to stay looped in with local business journals and any niche trade groups for your property focus – whether it’s organizations like the National Apartment Association for multifamily or the Self Storage Association for that sector.
  • Learn to recognize a good deal: Study comparable sales and rental data to develop a sense of the price range of properties you’re looking for. Experience can help spot mispriced assets quickly, or you can find issues that could lead to a good deal. Say there’s a property with high vacancy rates due to nearby construction disrupting the area temporarily. That could present an opportunity to negotiate a lower price based on those short-term issues.
  • Get familiar with key commercial real estate metrics: Don’t just take a proforma from a commercial real estate broker at face value since they are best-case scenarios. To really separate the good deals from the bad, you need to dig into the numbers yourself. Metrics like cap rates, cash flow, net operating income, and debt service coverage ratios can reveal a property’s true potential.

3. Sourcing deals

Sourcing good deals is tougher in today’s market, but it’s not impossible. You can still use strategies to uncover those overlooked real estate deals. Here are a few ways to go about it:

  • Look for motivated sellers: Keep your eye out for motivated sellers, which are owners dealing with issues that might compel them to sell. Situations like high vacancies, deferred maintenance, or even strained partnerships are where people are ready to move on. The smart move is building relationships with brokers, attorneys, and property managers who have the inside scoop on an owner’s situation.
  • Conduct neighborhood “farming”: Target specific neighborhoods through direct mail, driving for dollars, and other hyperlocal marketing to find off-market deals. The more you know about a neighborhood, the better you can spot opportunities.
  • Check public records: Monitor listings of properties entering foreclosure, tax lien auctions, and probate proceedings. You can also use property data software to find absentee/out-of-state owners and those behind on loan payments – all of which can potentially lead to off-market deals.

4. Using available resources

When it comes to real estate investing, there are various avenues and relationships you can reach into, such as:

  • Work with a local real estate agent: Leverage the expertise of local real estate agents who have inside access to listings and market intel that can find off-market and pocket listing opportunities that fit what you’re after.
  • Use online real estate platforms: Leverage tools like Agora’s deal tracking/CRM and fundraising software to streamline managing leads, deals, investor information, and potential opportunities in one centralized location.
  • Use social media platforms: Don’t forget social media as a networking tool. Join investor groups on LinkedIn and Facebook to develop relationships and come across potential commercial properties. And on real estate-specific sites like BiggerPockets, you can directly post details on what types of investment property you are looking for.

5. Expanding your reach

In addition to those real estate investing resources, you can get creative and cast a wider net using other outreach tactics like:

  • Direct marketing and targeted outreach: Use a direct mail campaign or email marketing targeted at specific commercial properties and locations aligned with your investment criteria.
  • Cold-call owners: You’d be surprised at how effective cold-calling or door-knocking can be. Picking up the phone to directly contact property owners or even showing up at their properties can lead to off-market opportunities. You can find owners through data records software or by connecting with them on social media.
  • Network with property owners: Attend local real estate investment clubs and industry events to build relationships with current owners who may be looking to sell down the road. Be active in the community – like golf events, charities, and trade associations.

6. Alternative strategies

If those more conventional tactics aren’t cutting it, here are a few other creative ideas for finding commercial real estate deals:

  • Network with commercial real estate vendors: In addition to brokers and property managers, build relationships with other vendors like title companies, contractors, and architects. These people often get early information on properties coming to market or owners who may be motivated to sell.
  • Attend property auctions: Government and institutional sellers frequently liquidate assets through public auction platforms. These can sometimes represent opportunities to buy properties at below-market pricing if you’re able to move quickly.

7. Advanced techniques

Once you’ve got the basics down, there are some more advanced tactics to find real estate investment opportunities, like:

  • Drive the market: Take neighborhood prospecting to the next level – map out a schedule to regularly drive through the local market areas of interest. Keep an eye out for any signs of change or activity, and find a simple way to track what’s going on at a high level over time.
  • Use a three-pronged approach to evaluate properties: To analyze a commercial real estate deal, use comparable sales data to understand market value, evaluate the physical condition, and dive deep into income and operating expenses to model cash flows. Examining it from these different angles provides a full picture of a fair purchase price.
  • Invest through private equity real estate: Pool capital from multiple investors to buy and manage commercial property through a syndication. This real estate investment strategy provides access to larger deals, and diversified investment portfolios, and can increase potential returns.

8. Look into off-market commercial real estate properties

Any seasoned real estate investor will tell you the best opportunities are often the off-market deals flying under the radar. Here’s the inside scoop:

  • Benefits of off-market commercial real estate deals: These unlisted properties frequently offer major advantages like less competition, more negotiating leverage, and the chance to get in before word hits the streets. If you can find these deals before other buyers, you’ve got a much better shot at landing the deal on your terms.
  • How to find off-market commercial real estate deals: Networking is key for getting tipped off on off-market opportunities. Build connections with brokers, other investors, and anyone with their ear to the ground who knows what you’re hunting for. They can give you the inside line when something hot surfaces.
    Don’t just rely on your network, though. Get scrappy and dig into property data websites and databases to identify potential off-market owners. Then, reach out directly through mail campaigns or even some well-timed cold calls.

Bonus tips for finding the best real estate deals

Even after using all those sourcing strategies, don’t overlook these key steps to help you find the best real estate deals:

  1. Set a budget: This helps you narrow down where you focus so that you can really hone in on opportunities. It also stops you from getting caught up in a deal that is beyond your current capacity.
  2. Consider the location: Is this an area with the right visibility, accessibility, and qualities for your specific needs? Location impacts everything from tenant demand and rental rates to future appreciation.
  3. Do your research: Leverage every resource at your disposal – network with insiders for their insights, scour online listings, and hit the streets to gather local market intelligence. Once you’ve locked in the budget, location, and property niche, make sure to thoroughly source and underwrite any potential real estate deals before pulling the trigger.

Conclusion

The real estate market has changed, but opportunities are still out there for those willing to put in the work. You can uncover winning deals by connecting with insiders, pounding the pavement, and thinking outside the box.

It all starts with upfront planning and sticking to your criteria. Stay disciplined, get creative with your prospecting, and find the next golden commercial properties ripe for the taking.