Hire Your Own Inspector

When you’re looking to buy any piece of real estate, especially a home or residential investment property, you always want to make sure you have a proper inspection. Now inspections are done by many different parties in the transaction. The bank may have their own inspector, the realtor will have theirs, and even an insurance company might have an inspection or appraisal done on the property. So when the negotiations begin, you will be presented with all the information about your potential purchase including an inspection of the property and a current appraisal.

crawl space

Most home buyers and investors will assume that this is a legitimate form and that an unbiased appraisal has been done. But many times that is not always the case. Bankers and realtors have a vested interest in making the property look more expensive than actually is. That is not to say that they are deceiving you in anyway, it’s just that if there are certain defects that they deemed important to hide, they may influence their appraiser to overlook the issue, or possibly even to downplay it. Many inspectors get volume business from banks and realty companies. One bank alone may bring them 50 to 100 inspections per year . So it is in their best interest to keep the banks happy. They may be honest people, but would be tempted to look away in fear of losing a chunk of their income.

You should always have Attics and crawlspaces inspected for potential mold and leaks. Especially around ventilation areas. These are locations that homeowners would never run across as they enjoy their home. In the northeast, during routine West Chester air conditioning repair jobs, leaves had come in through the roof and were molding. So unsuspected areas of wetness could cause mold and deterioration over the years. So what is the answer? Inform the bank and the realtor that you will be hiring your own inspector to do a thorough investigation of the property. Let them know that you respect the report given, but you would like to conduct your own. If they are honest in the dealings, they should have no problem with that request.

Investing in Commercial Real Estate

Investing in Commercial Real Estate

Investing in commercial real estate is an excellent way to generate passive outside income, there are plenty of millionaires that got their start in real estate.  The right investment can yield an excellent return but even commercial real estate is not without risks.  You need to understand these risks before you start pouring money into an investment.

Short and Long Term Investments

There are plenty of reasons to invest in commercial real estate chiefly is that it offers both short and long term gains.  In the short term there can be immediate cash flow coming in from the property.  In the long term, commercial properties appreciate in value and you can end up with a huge return when it comes time to sell.  One of the many perks of investing in commercial properties like apartment buildings for example is that even though all of your units aren’t rented you can still make money on your investment.  Here are some other reasons to invest in commercial real estate.

Different Types of Property

Commercial real estate gives you plenty of options as to what kinds of properties you can invest in, there are shopping malls, apartment complexes, and office buildings.   Essentially if a building has more than four units it is considered commercial property.  There are other buildings that fall into the category of commercial real estate and they include mobile home parks, RV parks and commercial centers.

Financing

Financing commercial real estate is vastly different than buying your home.  Very few investors use all of their own money to purchase a property.  In most cases they will work with a lender.  If that is the route you take you will need to let the lender know the type of property and how the investment is going to make you money.  It is similar to buying a business.  You will need a larger down payment than you would to buy a house.  Investment properties usually require 25% down whereas your home you can purchase with as little as 5% down.

Any property you are considering needs to have an assessment done along with an inspection.  Also you will want to work with an attorney to make sure that there are no unexpected surprises to come up later with the title.  Once all of that is squared away then consider several different lenders, to get the best mortgage rates.  There are also pools of investors that invest in commercial property that you can work with.

Commercial real estate is a valuable investment but like any investment it comes with risks so do your research first!

Listing Your Commercial Property for Sale

Listing Your Commercial Property for Sale

Listing your commercial property for sale is vastly different than listing your home for sale.  What does remain the same is the need to work with the right real estate agent.  You need to know how and where to market your property before you make any decisions regarding contracts.  Here are some thing you need to consider before your property goes up for sale.

Working with an Agent

There are many property owners who believe they can sell their property themselves and it will save them the expense of paying a realtor a commission, while that is technically true you’re doing yourself a disservice.  They have ways to market your property that you just don’t have access to along with connections and the ability to negotiate a much higher price.  Agents also have access to paid listing services that only work with licensed real estate professionals.  These are networking hubs for agents with buyers and investors to connect with other sellers, they can get your property sold faster and at a higher price.

Qualifying Prospects

It is an agent’s job to field phone calls from potential buyers and weed out the ones who are not serious or not in a position to buy your property.  They can screen pre-qualified  buyers and assist with arranging financing if need be.  They can also act as a buffer during the negotiating period.  They can communicate with buyers, lenders, attorneys and title companies during the process, leaving your free to run your business as you see fit.

The Commission

Real estate agents, particularly commercial real estate agents are highly skilled professionals and they get paid for what they do, that compensation comes in the form of a commission on a sale.  These agents are typically paid a percentage of between 3-10% of the selling price.  Bear in mind that before you sign a contract with a listing agent for your property that these rates are negotiable.  The property itself, the condition, location and how difficult it will be to sell are all factors that going into determining the rate of commission for the agent.  In an area that is economically depressed where it could take years to sell a property is going to command more than a rapidly growing neighborhood.  The more the commission is the more incentive for the agent to sell the property.

When you decide to work with an agent be sure to deal with someone who specializes in commercial property rather than a friend who sells residential real estate, they have completely different requirements.  A good agent understand the market, how to market your property and how to negotiate a favorable selling price for you.  They are absolutely integral to the process and should be valued.