We are thinking about it, and a few of us are taking action and getting their hands on real estate investment properties. According to Vahe Hayrapetian for most of us, the obvious selection of properties are single family homes. Although you can invest in real estate without having property, the majority of people follow the experience they made while purchasing their house. This is familiar ground, as well as for doing a property deal of this type the learning curve is quite slim. Naturally, there’s a drawback with this particular approach. The competition is fierce, and there are markets where investors are artificially driving up the price of the properties while totally discouraging first time home buyers. The blast of the property bubble is simply a matter of time if this is the case. How do you prevent these situations and still successfully put money into real estate? How do you get in front of the contest and be ready for bad times in real estate investments too? The single response is commercial real estate.
Why commercial real estate you might ask? Commercial real estate is a solid investment in bad and good times of the local real estate market. The commercial real estate I am referring to is multi-unit apartment buildings. Yes, you will eventually be a landlord, and No you don’t have to do the work by yourself. You’re the owner and not the supervisor of the apartment building. The price of managing and owning the edifice a part of your expenses and will be covered by the rent income. If there are more units, apartment buildings are considered commercial real estate. To make the numbers work you ought to consider to either own multiple little apartment buildings, or you ought to go for larger buildings. This will definitely keep the cost to income ratio at a positive cash flow. Possessing rental properties is about positive income.
With investing in single family homes, it is easy to attain positive income. The appreciation of the house will contribute to the positive cash flow, even in case your rent income does not cover your expenses. With Vahe Hayrapetian commercial real estate, the rules are very different. While single family homes are appraised by the value of recent sales of similar homes in your neighborhood, commercial real estate does not care about the value appreciation of other buildings. The worth of the property is exclusively based on the rent income. To increase the value of a commercial real estate you should discover a means to raise the rent income. The formula on how this is calculated would be too much for this brief post. I listed a few novels that were quite helpful where you could find all of the details. What is another benefit to invest in commercial property? Commercial real estate lending is different than financing just one family home.
You are at the mercy of lenders who prefer to be sure that you’re in the position to pay for the house with your personal income, while financing an individual family home. Commercial property funding is dependant on the properties capability to cover the financing price and to produce positive cash flow. You want to go out there and dive into the deals, after reading all these information about the commercial property. Not too quickly. You need to learn as much about real estate as possible. In commercial real estate, you are dealing with professionals. Go out there and do one or two single family home deals yourself. It does not matter if you make tremendous profits to start off with. Most newbie investors are losing money on their first deal anyhow. In case you can figure out how to reveal positive cash flow with your single family home deals you’re forward of the pack. The only valid qualification in the Vahe Hayrapetian real estate business is practical expertise. Having a few deals under your belt, you can go out there and start taking a look at commercial real estate and even impress experienced investors with your knowledge. Because you made this experience on your own and you understand what you are talking about.