Do you have a clear purpose when obtaining commercial investment property loans? Do you have clear plan? Have you given much thought to it?
For some of you it you can see. For some it may not be.
Let\’s start out with a real life story of what can happen any time you do not have a clear purpose and plan in selecting commercial investment property loans. A clients let’s call him, Bill and the man found a multifamily property and applied for an apartment loan. It was love to start with sight for him while he found this gorgeous apartment property. It was new and stunning!
The problem was rrt had been overpriced and had low cash flow. He would not be making a good deal of profit. But he was blinded because of the beauty of the apartment complex and wanted a multifamily loan.
His emotions blocked his reasoning. They got carried away with his love for the property, and he ended up purchasing a property that wasn\’t in accordance with sound business sense.
What is the best purpose for getting a commercial property?
Reasons for commercial investment property loans
Let\’s point out that having a well funded retirement is essential to you. You know that commercial investing is a very good way to have accumulation of wealth C including residual income. And commercial properties after some time tend to give you increasing income from increased rents, and increased property value. Depreciation, tax advantages, etc. is also financial benefits.
You want to buy a commercial property that needs work and you want to upgrade it. commercial investment property loans can help you with that upgrade. You or even a partner of yours has extensive expertise in rehabbing commercial properties successfully. You realize costing and estimating, and determine whether the project is executed correctly, it really is highly profitable.
I must stress the need for having experience in rehabbing commercial properties successfully. This is for residential property rehab too. Many novices turn out losing a lot of money, or just earning money for the construction crew and little or perhaps nothing for themselves.
3. Buy it and flip it.
This is often similar to buying a commercial property that requires work and upgrading it, because many individuals who buy properties and flip them upgrade the property. But in it you don\’t hold onto the property. You sell it for a quick profit.
However C one crucial thing. You may want to hold onto the home for two years to meet a leading seasoning requirement. This is the element of holding onto the property for two years (or it is usually a little less), to be able to qualify for increased appraisal value. Put simply, If you purchase a commercial building and in a few months you make extensive improvements C plus it is possible to raise rents appreciably, you do not get the increased appraisal value until around 2 years. You will however get increased value thanks to capital improvements added using your original purchase price.