Author: Sharon Samraj
We are aware that the residential real estate market for investors has immense competition, number of real estate seminars will urge you to search for desperate home owners. After the stock market crash, the real estate market is witnessing boom and we need to understand the fact that boom indicates greater competition. Hence we need to explore a new opportunity that has less competition like the niche market investments. This market is already setting new trends in the commercial real estate investments.
Now something in detail has to be explained about the niche market, it’s nothing but commercial real estate. You can find several niche market investment opportunities within the commercial real estate. You can question the fact of why there is less competition in the niche real estate market; this is because the real estate investors need to qualify themselves for commercial financing. Most of the investors are made to believe that they require a 20% down payment to initiate the process, but this is not completely true. Consider for instance you need to finance a property worth $2.5 million dollars and 20% on it will be $500000 further you need to add the legal fees and the closing costs. We know that there are few investors who can meet these requirements. But you need to be aware of the source from where the finance has to be arranged, visiting a commercial bank is a wrong choice because of its feature of structured nature of offering finance, lack of flexibility and these banks are also regulated by the federal government for underwriting confirmed loans. We need to remember that in most of the cases the loans require 20% down payment, you can derive the benefit of using private or hard money lenders only when there is no other alternative. Financing is a major concern for the real estate investors but there are very few people who understand from where the finance has to be arranged and how. All real estate investors prefer shopping for properties and then arranging for finance but it is important to remember that finance is vital and shop for finance first so that you can easily place the order for the commercial real estate property you are intending to buy. First tracking finance will help you save and make more money over time in the real estate commercial properties.
Some of the benefits of purchasing commercial real estate by the real estate investors are as follows: The commercial real estate aims at making money for the investors, consider there is a 7% cap rate on the $5,000,000 sample property, there would be an annual cash flow of $350,000 now isn’t this great. Further with commercial real estate you can totally eliminate the rehabbing process. There is no need to pay penalties to lenders for the mere reason of not being in owner occupied properties. You can easily qualify to purchase these properties by using commercial tenant’s credit rating and the long term rental leases.
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