conversation: User (shnoozer): "My parents are downsizing and just sold their house for $1.2Million. They will be buying a condo for around $300k and are looking to invest in commercial real estate. They are looking to use $500K as a downpayment for the purchase. My brothers and I will be responsible for finding the property and managing it. \n\nIdeally, we would like to use the income generated to pay for the building itself, parents living expenses (taxes, food, utilities), and put whatever is left over into a joint business savings account which we will use towards future investments.\n\nIt is my understanding after speaking with my Mortgage Broker that as long as the property can pay for itself, we should not have a problem getting a mortgage. He said we would be eligible for a mortgage as long as we have 25% down. ~ $2Million Property\n\nSince I am new to this, could anyone shed some light and throw me some advice on how to begin looking for these types of properties, what do the mortgages look like, and also help me understand what is a good deal vs a bad one, and what red flags to look out for. \n\nFor Example: This looks too good to be true: http://www.forsalebyowner.com/listing/16-bed-Multi-Family-home-for-sale-by-owner-314-Sixth-Street-07302/20570792\n\nThis is the beginning of a new journey and I hope to learn as much about it and be prepared for it as well as I can be before I commit to such a large investment.\n\nTLDR: Looking to invest $500K into commercial property, need advise.\n\n\n\n\n\n"
  Self: "Commercial Loan Officer here,\n\nDo not make your decision on how much you can qualify for. Of course that is what a mortgage broker will tell you, but you want to make sure what the best investment is. I'm here in Austin, TX where just about any property is good property, but you need to really do your research on any property you buy. If you know someone in commercial appraising ask for their opinion (You'll have to get an appraisal for the bank anyway, but it wont hurt to ask).\n\nIt sounds like you are interested in rentals, if you do this you'll need to have at least a 50%, but probably 75% (In Austin it's guaranteed you will fill it up) occupancy with current or future residents before you can get approved.\n\nIf you want to do offices, they will want the same thing, but I've seen cases where they want up 90% occupancy for at least 5 years. Especially if none of your family has previous experience.\n\nMy best advice is to find someone to include on your team that has experience with managing whatever you decide on purchasing. Also, don't buy the most expensive thing you can afford, make the smartest investment. You want to look at the long term growth appeal, and minimal risk. Don't ever let someone sell you, and dont make a decision spontaneously."
  