Frank X. Acocella, CounselPro Lending, on Property Flipping

Over the last decade, a lot of attention has been placed on flipping houses, but there has been less talk about flipping commercial properties. While most commercial properties are large and require more work to be done, there are fewer on the market. More substantial profits allow flippers to cash in on bigger profits and higher returns when the properties are sold. There is also less competition in commercial flipping because there are smaller pools of potential buyers.
Flipping properties can be applied to commercial properties. Below are just a few of the things to keep in mind if you are considering flipping commercial spaces.

Versatility in the market
Commercial properties have limitations in zoning and practicality for commercial purposes. Places like restaurants need to be handled differently than a space that is going to be used as a salon or retail space. Open spaces also have more potential to be something entirely different once flipped. Not only does changing the area opening it up to more buyers, but it also has the potential to turn a profit faster when it is converted into a more versatile space.

Established value
When flipping a residential property, it is essential to check the values and recent sales of properties in the area, but commercial properties are entirely different. They are viewed as business investments, and as a buyer, it is easier to determine the expected sale price of the property. Once rates are established, the potential flipper can subtract the purchase price from the expected sale value and will know what is left to cover the profits of the property as well as the cost of the upgrades.

Know the property types
“Commercial” is just an overall term for office, industrial, retail, multi-unit apartments, and mixed-use properties. Remember that local supply and demand for commercial properties determine their value and rental rates. Areas with less availability of commercial properties will have higher value and higher rental prices, while areas with more availability will have lower rental rates and lower values. Different commercial properties also need to be analyzed separately.

Flipping commercial properties is completely different from flipping a residential property. But the market for these properties is small, and the chance to make a large profit quickly is what draws in most flippers.