http://www.REIClub.com – What Is Commercial Real Estate Investing? Here’s A Quick Video On The Many Types of Commercial Investments And Their Benefits.
Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got quick video on the many types of commercial real estate and some quick benefits to each.
TYPES OF COMMERCIAL REAL ESTATE
– Multi-Family Apartment Buildings
– Self Storage
– Mobile Home Parks
– Retail Space/Center/Complexes
– Office Buildings
– Industrial, Manufacturing and Warehouses
– Land Development
– Hotels and Resorts
– Health Care Facilities
DIFFERENCES BETWEEN COMMERCIAL AND RESIDENTIAL
– VALUATION
– Residential: Purchase – land value and property value, Rent – FMR – determined by area
– Commercial: Purchase – determined by income potential, Rents are determined by $ /sq.ft, demand vs. supply
– FINANCING
– Residential: Smaller deposit, 100% loan to purchase, lower rates, but not as easy to get seller financing
– Commercial: 30% deposit, higher rates, but better chance of leveraging – seller financing or using OPM.
– RENTAL COMMITMENT
– Residential: 1 year with option to renew, tenant quality fluctuates, vacancies hurt
– Commercial: 3-20 Years, annual rent increase, better tenants, more flexibility with vacancy
– MANAGEMENT
– Residential: Most of the time YOU are the manager, time consuming, not budgeted for management
– Commercial: Property management expenses built right into the valuation of property, professional companies to manage the building
– COSTS
– The cost “per door” for a 20 unit multifamily is significantly less than the average cost of twenty single family homes.
BENEFITS
– Huge income potential and High Returns
– longer lease periods – 5-20 years
– rent increases are built into the agreement with the tenant
– Numerous Tax Benefits – Tax-Deferred 1031 Exchanges
– Sellers can be more Flexible in Pricing and Financing Options
– A lot of expenses are paid by the tenant – triple net
– High appreciation potential
DISADVANTAGES
– more risk vs. residential
– Lots to learn
– Ties up capital
– Downturns in economy have bigger effects
– Mechanics of purchase are more complicated
– More legalities – vary per city/state
As you can see there are tons of ways to get involved with commercial real estate investing. But its not for everyone. It takes anexperienced real estate investor and the right financial backing in order to even enter the commercial real estate market. The risks are higher, but the pay-outs are too, so always make sure that you can handle the time and costs associated with commercial
Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you’ll be automatically notified when we upload more quick video tips for you. Take care and good investing.
Learn how to use Creative Financing to build wealth in Real Estate. Also, download my Best Selling Book at: www.reiandme.com
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