Commercial Real Estate Education
What is it?
Commercial real estate usually refers to any apartment building that has over four units, but can also include shopping centers, gas stations, office buildings, etc.
Pros:
- Strength in numbers. Multiple units with only one roof to repair, one yard to cut, and one location to drive to.
- Excellent tax advantages
- Long-term wealth building ability
- Non-recourse loans available (the bank can only go after the property, not you, if there's a default in payments)
- Credit for these properties is based on not just the investor, but on the property as well
- Strong cash flow potential allows for potential delegation of management responsibilites
- Turnover can be managed more easily, as there are other units that can offset the loss of rental payments
- Although many sellers will take back a second mortgage, most properties require a substantial down payment of at least 10% of the purchase price
- Poorly managed properties can lead to financial ruin very quickly
- Property managers need to be supervised closely, as no one will will take care of a property like the owner.
- Finding a realtor who specializes in commercial real estate in your area can be a huge asset.
- Market to landlords who are going to eviction court.
- Market to landlords who live out of town.
- Look for properties that look poorly managed and market to the owners.
