Buying Commercial Property For Beginners: How To Start

Investing in commercial real estate can be a smart strategy for building long-term financial stability. Whether your goal is to develop retail space, own office buildings, or lease out mixed-use properties, commercial real estate offers steady income potential and asset appreciation over time. For those just starting out, however, the process can seem complex. This guide covers the foundational steps to help beginners make informed decisions when buying commercial property in Evanston, IL.

Before beginning your investment journey, it's important to understand what qualifies as commercial property. Unlike residential real estate, commercial properties include buildings intended for business use, such as:

• Office buildings
• Retail centers
• Industrial properties
• Warehouses
• Multifamily buildings with five or more units

Each type comes with different responsibilities, lease structures, and investment returns. Understanding these distinctions will help you focus your search on the property type best aligned with your goals.

Evanston, IL, located just north of Chicago, offers a favorable environment for commercial real estate investment. Home to Northwestern University and a diverse local economy, Evanston supports a wide range of businesses, from technology startups to retail and professional services.

The city’s strategic location along Lake Michigan, access to public transportation, and vibrant downtown create consistent demand for well-located commercial property. Whether you're considering office space near the university or retail storefronts in the city center, the Evanston, IL, real estate market provides multiple avenues for new investors to explore.

The first step when buying commercial property is identifying your investment objectives. Ask yourself:

• Are you looking for passive income from long-term leases?
• Do you want to increase property value through renovations?
• Is your timeline short- or long-term?

Answering these questions will help you determine the right property type and strategy. For instance, office buildings might offer stability with corporate tenants, while retail spaces could present higher risk but better returns depending on location and foot traffic.

Commercial real estate deals involve many moving parts. Even as a beginner, you’ll need a team of experienced professionals to guide you through each phase:

• Commercial Real Estate Broker: A broker with local expertise in Evanston, IL, real estate can help you identify properties, evaluate market value, and negotiate deals.
• Attorney: A real estate attorney will review contracts, leases, and ensure compliance with zoning laws.
• Accountant: Tax strategy plays a large role in commercial investing. An accountant can help structure the deal to minimize liability.
• Lender: Partnering with a lender early helps clarify your financing options and strengthens your position when making offers.

Assembling a strong team is essential for mitigating risk and making sound investment decisions.

Commercial property typically requires more capital upfront than residential real estate. Financing can come from several sources:

• Conventional Commercial Loans: Offered by banks or credit unions with terms typically ranging from 5 to 20 years.
• SBA Loans: The Small Business Administration offers loan programs like the 504 and 7(a) for eligible buyers.
• Private Lenders or Investors: In some cases, funding may come from private sources or investment groups.

Expect to provide a larger down payment—often 20–30%—and demonstrate financial strength through a strong credit profile, income documentation, and a business plan if needed.

Due diligence is a critical part of buying commercial property. In Evanston, this means understanding:

• Local zoning ordinances
• Future development plans
• Traffic and foot flow patterns
• Vacancy rates and rental trends
• Comparable property sales

The Evanston, IL real estate market can vary block by block, especially downtown or near major employers like Northwestern University. Working with a broker who understands these dynamics ensures you make decisions based on accurate and relevant data.

Once you've identified a candidate property, evaluate its investment potential. This includes:

• Net Operating Income (NOI): Calculate the expected income minus expenses to determine profit.
• Cap Rate: A percentage that expresses return on investment. It’s calculated by dividing NOI by the property’s purchase price.
• Cash Flow: Assess how much money you’ll have after debt payments and expenses.
• Occupancy History: Review how frequently and consistently the property has been leased.

If the numbers make sense and align with your goals, the next steps include making an offer and initiating formal inspections.

Before closing the deal, perform a thorough due diligence review. This typically includes:

• Property Inspection: Hire professionals to evaluate the building’s structural, electrical, HVAC, and roofing systems.
• Environmental Reports: Ensure the land is free from contamination or hazardous materials.
• Lease Audits: Examine existing tenant leases to confirm rental income and obligations.
• Title and Zoning Checks: Confirm ownership and that the property meets local zoning requirements for intended use.

The due diligence phase is where first-time buyers can benefit significantly from a seasoned broker and legal team.

If all inspections and financial checks pass, you’re ready to close. During this stage:

• Final contracts are signed.
• Funds are transferred through escrow.
• Title insurance is issued.
• Ownership is transferred.

Once the deal is finalized, property management becomes your next responsibility, whether through a third-party company or direct involvement.

Buying commercial property is not without risks. As a beginner, keep the following in mind:

• Start small: Consider beginning with a smaller building or mixed-use property to gain experience.
• Stay informed: The commercial real estate landscape evolves. Market trends, interest rates, and tenant demands can shift quickly.
• Be patient: Commercial properties often take longer to lease and may experience higher vacancy rates than residential real estate.

A long-term approach, coupled with due diligence and expert guidance, is key to succeeding as a new investor.\

Expert Guidance for Commercial Property Investments

Entering the commercial real estate market can feel daunting, especially for first-time investors—but working with local experts makes all the difference. Mary Summerville and Jason Cox of Summerville Partners bring a wealth of experience navigating complex transactions in Evanston and the greater North Shore. Their deep understanding of market trends, zoning regulations, and property valuations helps new investors identify strong opportunities and avoid common pitfalls. With their guidance, you can move from research to ownership with clarity and confidence.

Summerville Partners was founded by Mary Summerville, a broker with nearly three decades of real estate experience. Over the years, the firm has closed more than 1,700 transactions and overseen sales totaling over two-thirds of a billion dollars. Clients return to Summerville Partners for their consistent professionalism, in-depth market knowledge, and commitment to ethical service.

The team operates with a client-first mindset, continually refining its skills and adjusting to market demands. Their approach combines a proactive understanding of Evanston’s market inventory with the latest technology and systems. This enables them to identify prime opportunities and secure favorable outcomes for buyers and sellers alike.

Contact Summerville Partners today for expert advice and personalized assistance navigating the Evanston, IL real estate market.