If you have been investing in residential real estate for some time now, you might have been considering commercial investments. The absolute best way to get involved with investments is by doing research, getting advice, and contrasting the familiarity’s with some of the differences. Knowing the pros and cons before getting involved in a big purchase can help you weigh your options and find out what is best for you.
One major difference between commercial and residential real estate is how the bank values them. Commercial bank loans tend to require a higher down payment that can easily be more than 30 percent. Check with your lending institution to find out if they deal with commercial real estate. We have a list of commercial lenders we have worked with in the past, just contact us today and we will be happy to provide them to you!
Commercial real estate offers the potential for increased cash flow and higher stability. Renting out several spaces in a multi-unit property means more income, and the return is usually higher per square foot if you’re getting the full potential out of the property. This can also mean less risk. If one of several tenants leaves, you will only lose a portion of the return. Commercial leases offer steady income because they are also usually much longer in duration.
As with both residential and commercial investments, it is always important to ask questions and do your research. There are many parts to look into when purchasing commercial real estate specifically. Some of these include questions about former management, lease renewals, population income, and the seller’s cash flow statements, among others. See our Top 10 Do’s and Don’ts of Purchasing Commercial Real Estate- click here.
Source: Entrepreneur Article