Commercial real estate tends to be the ignored big brother in real properties investments.
A commercial Office Building
Real estate agents tend to specialize in domestic properties for its sheer size and simplicity. But what seems to be a complicated issue is actually not as difficult as it appears. So what is the difference?
Well, structurally, a residential property is really a building like a house or a condo with a residential occupancy permit; i.e. fit for human habitation 24/7. Most residential real estate investors are really just buying a unit at a time.
But then a commercial unit expands on that idea. A commercially based residential real estate investor may actually own the entire complex and rent them out. Then there are strip plazas, mini malls, larger malls, industrial condos, office buildings, trailer parks, storage facilities, etc.
Let’s take a look at some of the reasons why this should be looked at more closely.
Since more people focus on residential properties, commercial real estate has a lower speculative value.
Rents/leases values closely reflect the real property value based on multiples often depending on the mortgage interest rates.
There is less subjective values placed upon the way the property looks or just its sheer size.
But from there, the world of commercial real estate gets really exciting if you can handle it, or really frightening if you can’t.
You will likely have multiple tenancies to deal with – it spreads the risk and also increases the work.
You wil likely have great leverage – financing costs can remain static – but rents/leases and property values can be increased with time.
A really good commercial real estate lawyer can tune the tenant/landlord deal to get you out of really expensive and unfair situations.
There’s much less of an emotional issue when dealing with peoples’ homes – it’s mostly business.
Often property taxes are paid by the tenant and the business taxes are borne solely by the tenant.
There are many more deductibles that you would not normally get with residential real estate – get a good real estate tax accountant to help you.
Just a quick comment – most investors in commercial real estate tend to have far better cash flow than residential ones. That alone should make any real estate investor sit up and take notice…
Technorati Tags: Commercial Real Estate, Properties Investments, Real Estate Investor
Tags: Commercial Real Estate, Properties Investments, Real Estate Investor
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Suddenly real estate investment got onto the radar of investors wanting to put money somewhere; anywhere but the stock market. Tons of e-mails got everyone busy and most investments were about the state of real estate.
Number of Homes For Sale Have Fallen Far More Than The Prices.
Watching the GTA (the Greater Toronto Area) real estate right now, I do not see the great investor panic prevalent just recently in the US. Instead, home owners have simply put off selling their homes and not upgrade to larger houses.
Similarly, investors have decided to hold off disposing of their properties if they need not. So reports about falling home prices did not keep pace with the falling numbers of homes sold in recent months. Even the latest real estate prices for the month of October did not reflect panic selling but indicated a lower selling average price across the GTA.
That said, the Provincial and Federal Governments in Canada have been making the right noises about easing lending rates and liquidity. There is no general panic; but there is belt tightening, evidenced by the stricter lending practices. Although an end to this recession is still not evident, governments all over the world are very definitely preventing a total melt down of the global financial services. That augers well. And I am for one, hanging in there and not panicking.
In fact, I see opportunity.
Then, there is the plethora of real estate Gurus and pundits offering up their services to invest in commercial real estate. Well, let me qualify that. They are promoting their know how into investing in real estate with rentals and rental potential.
It does make a calculated financial sense to have stable businesses or renters paying your mortgage and maintaining that real estate investment. But due diligence is the order of the day, no less. Also, be very careful of your borrowing terms. Invest in the services of a really highly respected real estate lawyer specializing in such commercial and rental properties. They’ll save you a bundle by avoiding the money pits and traps.
Then there are the sitting on the fence buyers and sellers.
I can only advise doing the math to match your needs; financial, physical or emotional. Do what makes the most sense. Right now, it is the higher prices and larger properties that are experiencing the greatest price derease and slower market.
What surprised me were the number of real estate agents that were e-mailing requesting my take on the situation – and I thought they were the experts there! But verily, this recession has everyone spooked. My reply to them has been to actually seek opportunity right now. Look for new ways to make money or promote your services. holding back right now is one of the worst things you can do during a slow down.
The winners will be those that take the plunge and go right ahead and promote their real estate business; take calculated risks. Those holding back will be akin to commiting business suicide.
This is the time when fortunes are won or lost.
Technorati Tags: Commercial Real Estate, Greater Toronto Area Real Estate, Promote Their Real Estate Business, Real Estate Investment, State Of Real Estate
Tags: Commercial Real Estate, Greater Toronto Area Real Estate, Promote Their Real Estate Business, Real Estate Investment, State Of Real Estate
Posted in Financial Freedom, Real Estate Investment | No Comments »
