Whether you’re an investor, broker, mortgage lender, solar installer, contractor, or roofer, knowing how to analyze commercial properties and identify lucrative opportunities is an important part of the game.
In this article, we’re going to show you how to ring every ounce of value out of your property analysis, and in doing so, show you the quickest way to identifying an opportunity and understanding it in-full.
Commercial Property Analysis
While there is a bit of preliminary research needed for you to identify properties of potential value, the research is just that—preliminary.
Property analysis is where the real digging begins. It is where you can use real data on properties and their owners to turn your speculation into certainty.
The four things almost all commercial real estate professionals will be looking for in their property analysis are numbers, narratives, indications, and assurance.
Numbers are the gritty details of a property—the years, dates, prices, and measurements associated with it.
Narratives are the stories and history behind a property. All properties have sale, debt, and ownership histories that can affect the way an investor, lender, or service provider interacts with that property in the present.
Indications are the signals that point to a property owner’s intentions or potential actions. They’re the data and insights that prove an owner’s desire or willingness to sell, refinance, rebuild, repair, and so on.
Assurance is essentially validation that a property is worth pursuing, and is a valuable use of time. Assurance is based on finding the right numbers, narratives, and indications tied to a property.
Now that you know what to look for, let’s explore how to find opportunities.
How to Analyze Commercial Properties as Opportunities
In the commercial real estate industry, data may never be as important as it is when you’re analyzing a property, its owner, and its surrounding market.
Without the right tools to access that data, however, your analysis is not going to be as thorough, and therefore, as effective as it could be. With the use of Reonomy, public records, and third-party consultants, you can always assure that you’re getting the most value out of your commercial property analysis.
Analyze Commercial Properties with Reonomy
The Reonomy Platform is the “fine-tooth comb” of property analysis, helping you sift through layers of data to find each and every granular piece of information on a property and its owner—including building-level information, sales history, and debt history. It’s easy to access, and easy to dive into.
No matter the market you want to explore, Reonomy can provide the data necessary for you to fully understand that property. This is thanks its ability to run an off-market property search.
You can search, find, and analyze properties and their owners, of any asset type, in any market nationwide—and you can do so with extreme depth.
Once you’ve run a property search on Reonomy and have identified your prospect properties, you can delve into their profile pages to analyze layers of building, owner, sales, and property history data.
Where you specifically end up on a property’s profile page will depend on the type of analysis you’re doing, and the owner intent and indicators that provide the most value to you. Let’s look at the different ways that you can analyze a property using Reonomy:
Building and Lot Analysis
First and foremost, you can analyze a commercial building and lot to see if it’s up-to-snuff with your investing, lending, or servicing requirements. Here you get mostly numbers with a bit of history.
You can analyze the lot size, building size, building age, and zoning. See lot square footage and acreage, as well as building square footage, number of units, number of buildings, number of stories, and floor area.
With the integrated Google map view, building service providers like roofers, solar installers, and landscapers can use Reonomy to analyze the physical layout and characteristics of a building, its roof, and its surrounding land.
In any property profile page, simply combine your expertise with the map view to analyze street-level and aerial shots of your target properties.
Reonomy provides access to in-depth property, people, and financial data, which together, through numbers, build a narrative around any commercial property. That narrative allows investors and sales brokers to quickly determine whether or not a property—on or off-market—shows indications that the owner is willing to sell.
By analyzing the sales history of a property and the habits of its owner, you can see if a property is a pursuable investment opportunity.
Start by running a property search. In this case, an investor could search for properties of a specific asset type, in a specific location, that have not sold within the last 10 years. This immediately identifies those more likely to sell, and weeds out those unlikely to sell.
From your list of results, you can click into the profile page of any individual property and visit the “Sales” tab.
In that tab, you’ll see the sales history of that property. For each transaction, you’ll see the recorded sale date, buyer, seller, sale price, execution date, and more.
This page can help in assessing both the profitability and risk of a commercial investment property. By taking the most recent sale price, reviewing the strength of the market, and using real estate comps to find other similar properties that have sold recently in the same market, you can determine fair market value.
From there, make a call to the local water, energy, and HVAC companies where your target property is and inquire about operating costs to gauge your potential earnings on rentals.
You can also use property sales patterns to access any extra risk. Perhaps a property has been sold for peculiar prices, or was sold several times in a short span. Identifying these red flags helps you avoid being blindsided by an investment.
Property Debt Analysis
You can also search Reonomy for properties with specific debt characteristics to identify properties likely to refinance in the near future. Search for properties based on their most recent mortgage amount, mortgage origination and maturity dates, and their most recent mortgage lender.
Debt brokers and lender originators could use this search to find properties that have mortgages of a certain amount, or with a certain lender, that are either maturing in the near future, or that originated in the typical 5-7 year window prior.
Within those search results, you can click into the profile page of an individual property, then visit the “Debt” tab.
There, you’ll be able to see the mortgage records of that property, including the origination date, maturity date, lender, mortgage amount, term, type and more, for past and current loans.
In this tab, you can analyze the characteristics of the property loan. You can look at the loan type and amount to see if the property is one that’d typically qualify for refinancing with your entity.
You can also see if a mortgage is spread across multiple properties with different lenders, and therefore in need of consolidation through refinance.
Commercial investors and sales brokers can also use this tab for their analysis of property red flags. Severely large debt alongside property operating cost analysis (as mentioned above) could tell a story of a negative cash flow, and therefore point to distressed property that may be sold in the near future.
By analyzing the building and lot, sales, and debt characteristics of a property on Reonomy, you can get a full understanding of the numbers and narratives of any property, thus understanding owner motives and assuring the value of that property as an opportunity.
Overall, by using Reonomy to analyze the building and lot, sales, and debt information associated with a single property, you can fully understand the motives of the property owner.
Use Public Records
Public records are another useful tool when it comes to commercial property analysis. In any market around the country, there is a local assessor, appraisal district, or something very similar that will provide you with access to property sales, debt, and ownership information on local commercial properties.
Take HCAD for example—the Harris County Appraisal District. Perhaps you’re a multifamily property investor in Harris County looking to analyze the numbers and narrative behind a property.
If you know the address or owner name of your property of interest, you can simply visit HCAD and run a property search to find information on individual properties.
When you enter the profile page of any property on HCAD’s site, you’ll be able to see the owner of the property, the past owners, its valuations, tax exemptions, and past sellers.
Another example is ACRIS, which is the commercial property records database for all five New York City boroughs.
With ACRIS, you actually search for documents, not exactly for properties. You can search “By Document Type,” and can find and analyze mortgage documents, deeds, and much, much more.
Each one of these documents presents you with a different piece of information that you can analyze about a property, to essentially piece-together a narrative and derive insights about its owner.
Hire a Consultant or Advisor
The last option for property analysis is to hire a consultant to do the digging for you. They can find the numbers, build the narrative, point out the indicators, and thus bring assurance to you for a subsequent fee.
Depending on your needs, consultants can vary. Smaller groups may only offer pieces of analysis, like risk analysis, property valuations, or underwriting. Other firms may offer full, all-around investment analysis.
These resources can even be used in tandem. Hypothetically, let’s say you’re a mortgage broker in Harris County. You’ve used Reonomy to find a property, its owner, and its owner contact information. You took that owner name and inputted it into HCAD to find extra tax information on that property to be sure the owner is in good standing.
As a double-check, you could then use an underwriting consultant to further grade the property owner as someone you’d offer refinancing to. While it’s usually not necessary to use all three sources, they can certainly offer differing insights.
Rest Assured with Reonomy
All in all, Reonomy is the one tool that can bring you numbers, narratives, and show you indicators of owner intent and will. When it comes to property analysis, the Reonomy Platform It is your all-in-one assurance provider.