Commercial Real Estate Investing in Brampton: A Practical Starting Point
Karan Devgan, Brampton commercial real estate broker and investor, explains how first-time investors can evaluate plazas, industrial condos and mixed-use buildings.
More Brampton investors are looking beyond condos and rental houses. Commercial property can offer longer leases, tenants who pay many of the operating costs, and income that holds up well over time. It also takes a different kind of analysis. Karan Devgan is a Commercial Real Estate Broker with Royal LePage Flower City Realty and an investor himself. Here is how he helps clients get started.
Learn the language of income
Commercial property is valued mainly on the income it produces. The basics every investor should understand are:
- Net operating income (NOI). Rental income minus the operating costs the owner pays.
- Capitalization rate. NOI divided by price. It's a quick way to compare properties.
- Lease term and tenant quality. Ten years with a national tenant is very different from month-to-month with a start-up.
- Recoveries. How much of the taxes, insurance and maintenance tenants pay back to the owner.
Common entry points in Brampton
- Industrial condo units. Smaller price points, strong demand and simple to manage.
- Retail plaza units. Service and food tenants serving growing neighbourhoods.
- Mixed-use buildings. Retail at street level with residential above.
- Owner-occupied buildings. Your own business pays the rent and builds your equity.
Due diligence protects your capital
Before an investor firms up a deal, Karan makes sure they have reviewed the leases, rent roll, operating history, building condition, zoning and environmental status. Most problems are found in this stage, and that is also where buyers gain leverage to renegotiate.
Financing is different
Commercial lenders look at the property's income and the borrower's strength. Down payments are usually larger than for residential property. Karan introduces clients to lenders who regularly finance commercial deals in Peel Region, so financing is lined up before they make an offer.
Why investors work with Karan
Karan reads a deal as an investor and an operator. He'll tell you when the numbers don't work, and he'll point out the opportunities other buyers miss.
Ready to buy your first commercial property, or the next one? Start the conversation with Karan.
This article is general information and not financial or investment advice. Speak with your accountant, lawyer and lender before investing.