If you’re looking to diversify your investment portfolio or expand beyond residential properties, you may be considering buying commercial real estate. Real estate is a strong investment that usually appreciates over time, making it a great choice for a long-term investing strategy. However, if you’re planning on buying and financing a commercial property, there are a few things you should keep in mind before you get started. Take a look.

1. Work on Your Credit

The key to getting a good mortgage loan is having great credit history. While you may already know the importance of your credit in buying a personal home, for instance, you might not know that because commercial properties are often more expensive than residential ones, credit matters even more. Before you decide to invest in a property, be sure you’ve done all that you can to improve your credit score, since potential lenders will be looking at your documentation closely.

2. Choose Your Down Payment Size Carefully

One option for buying a property is to pay for it up front in cash. Of course, you’ll only want to go this route if the property cost is less than your total savings, since you won’t want to sink all of your funds into a single investment. However, if you don’t plan to pay in full up front, you’ll have to decide how much of a down payment you want to put in. For investment properties, the down payment is usually at least 20% of the purchasing price, but often runs up to 30% and even 45%. The amount of your down payment could also affect how much your monthly mortgage payments are, so you’ll want to keep this in mind when budgeting for your new property.

3. Get Pre-Approval

Finally, before you begin looking for the perfect commercial property, be sure to get a mortgage pre-approval from your lender or broker. This means they’ll review your financial records and provide a letter approving you for a loan amount. Getting pre-approved is a great way to show sellers you’re a serious, qualified buyer and could improve your odds at securing the property you want.

Buying commercial real estate is a great investment decision that can potentially pay off for years to come. The process of finding and financing the right place, though, can sometimes seem complicated. Thankfully, it doesn’t have to be that way! Keep these tips in mind as you start your search for the perfect property, and you’ll be on your way to real estate success.