Buying commercial or multi-unit properties stands

Buying commercial or multi-unit properties stands out as the secret that wealthy real estate investors discovered to accomplishing all these important real estate investment goals.

What are the types of commercial or multi-unit properties available to real estate investors, possibly new investors? What are the specific advantages newport beach luxury homes of investing in and owning commercial or multi-unit real estate?

Multi-unit properties add a wide range of investment options:

Office Properties (small two unit office to some high rise building),

Retail Stores (small retail stores to a giant shopping center),

Industrial buildings (small shops to some huge industrial park) or

Personal Storage or Private Record Storage area (from small to large self storage area complexes).

Key Advantages of Investing in or perhaps Commercial Properties

The ten important advantages of investing in Commercial or Multi-Unit properties are:

1 . Higher Cash Potential,

2 . Lower Risk on Vacancies,

3. Less Competition from other Property Buyers,

4. More Flexible Sellers,

a few. Depreciation Tax Shelter,

6. "Triple Net Leases" and Tenants shelling out expenses,

7. Equity Build-Up,

7. Solid Economic Value,

9. Massive Leverage (seller financing or just a few seller finance),

10. Long term Capital Appreciation.

Multi-Unit/Commercial real estate has a better income per square foot as compared to residential single family investements, or maybe apartments, and therefore a Higher Income Likelihood of the investor.

Multi-unit real estate by simply its very nature has the advantage of lower vacancy risk, because it generally involves two or more units. The vacancy risk with commercial or multi-unit properties is much smaller than single renter investments such as a single family home, because the vacancy risk is spread over a variety of units.

For example: One office getting vacant out of 20 offices is only a 5% vacancy. For the multi-unit investor, this 5% vacancy is usually significantly less financially traumatic, than a single family house being vacant, plus the real estate investor experiencing a very painful plus costly 100% vacancy.

Another point in support of investing in commercial or multi-unit attributes is there is less competition from other shareholders. This is because some investors are not relaxed in larger investments such as a flat, mobile home park, office building, retail price strip center, or industrial sophisticated. These types of larger real estate investments are usually out of many peoples' comfort zone.

Paradoxically the owners of commercial or multi-unit real estate are usually more flexible sellers. Multi-unit property sellers are not as emotional when selling their property. The sale on most multi-unit Properties such as an office building, retail strip center, or commercial complex, is simply a business decision.

Business or Multi-unit property sellers will be in a business frame of mind. Multi-unit real estate sellers are more likely to understand and agree to the particular request from the Buyer for either 100% Seller financing, or Extra Partial Seller Financing. These vendors are likely to agree to a partial Seller bring back financing, such as a second mortgage, or even second trust deed behind a great institutional lender first lien. [In Canada, this is commonly referred to as "Vendor Take-Back Financing."]

Investing in and holding onto multi-unit or commercial real estate provides substantial Tax Shelter to the multi-unit trader through Depreciation of the building and even improvements. The depreciation write off of allowed by the IRS, and most Declares, then shelters the massive passive income from the commercial real estate or multi-unit components, such as an office building, a retail industry strip center, or an commercial complex.

Another advantage to the investor is the fact in many commercial or multi-unit properties the tenants pay all the building's operating expenses. This is especially true in "triple net Leases, " which are generally found in office building leases, retail rents, and industrial leases. In these "NNN Leases, " the lessee besides paying the base monthly lease repayment, the lessee also pays for their particular "pro-rata" portion of the entire property's expenses. The lessee with NNN hire also specifically pays for their percentage of the real estate taxes, property insurance, and maintenance.

The tenants' lease payment offers the commercial or multi-unit owner using the cash to make the mortgage payments, which results in the proprietor having a nice equity build-up as time passes.

Investing in commercial or multi-unit homes has the advantage of providing solid economic value. This is because most existing business office buildings, retail strip centers, or even industrial complexes can be purchased for less than replacement cost, or in other words, the cost to build a particular new.

Commercial or investment properties such as office buildings, retail deprive centers, or industrial complexes, like the advantage of financial leverage with long time period fixed rate institutional debt. Another choice is for the possibility of 100% Seller loan, or a combination of institutional financing along with partial Seller financing.

Holding on to multi-unit or commercial properties over the long lasting will provide the investor with possible Capital Appreciation and increased earnings through higher rents over time. The increased cash flow can lead to long term enormous passive income, with appreciation as the frosting on the cake.

Due Diligence is Essential to get Commercial Investments

The due diligence process in multi-unit real estate begins inside the initial interaction with the seller, or maybe the Seller's Commercial Real Estate Agent or Agent. The due diligence process in multi-unit real estate is well underway inside the contract negotiation phase.

A multi-unit real estate investor needs to clearly identify for the Seller exactly what will be needed to intelligently analyze the potential multi-unit investment. The particular investor should frame the request documentation with phrases such as, "in order for me to make an informed intelligent business decision I will need the next documents... "

Generally multi-unit house owners are more knowledgeable and sophisticated. Start out with a simple request for basic information, such as a current rent/lease roll, replicates of all the current leases, and the money and expenses for the multi-unit residence for the last two or three years. The more superior the Seller, the less they are surprised or upset by a detailed extensive list of items needed for the complete research on the property.

Most Sellers', or their agent's, will give what an investor asks for in a timely manner. Only Seller's who have may be hiding something will decline the buyers reasonable request for data. If the Seller or their real estate agent refuses to provide the information requested, then a potential Buyer should be prepared to just simply walk away from the deal.

GOOD MULTI-UNIT EXPENDITURE HUNTING!