How many reasons to invest in commercial real estate are out there? Well, that depends on how ambitious you are. Despite some doomsday prophecies suggesting a floundering market and uncertain future, industry statistics have never looked better than they do now. More and more investors are finding even more reasons to invest in commercial real estate and the last thing you want to do is fall behind in the competition. If you’re looking for some investing basics to get you started, check out the top five list below.
Hard Money
The first thing you need to get out of the way is what to pinpoint when investing in prime real estate. Hard money offers a higher interest rate as well as a lower loan to value ratio — these can start as low as 15% and as high as 20%, depending on the project in question. Hard money deals are most often sought after for their quick turnaround of one to two weeks, making them an indispensable part of the investment process. Last, but not least, hard money loans are generally secured by a property of at least 30% equity so the investor remains protected.
Mortgage
The majority of people buy their homes with either a 15-year or 30-year mortgage. As such, home prices have increased over time and the amount of home equity people invest in also increases as they get older. Studies have shown the median amount of home equity for people below the age of 35 generally totals $20,000 overall.
Population
Even the best reasons to invest in commercial real estate will quail in light of mediocre shorthand knowledge. Staying up-to-date on just where people need to go and why is important to stay relevant. The year 2011 saw population growth in urban areas beginning to outpace American suburbs for the first time in over 100 years. A few years later there were over 327,000 home repossessions around the country.
Trends
What other facts are out there? Well, over 30% of people interested in buying a new home are first time buyers — this will significantly impact the buying process and who they turn to for help as they’re browsing the market. Another survey saw almost 60% of homeowners wishing they understood the terms and details of their mortgage better. Commercial real estate investing needs to back up its consumers in every area to ensure a happy process on all sides.
Reasons To Invest In Commercial Real Estate
Whether it’s finding secured short term loans or looking into hard money mortgage lenders, commercial property investing is easier than it has ever been before. Either the duration or payment period for private loans is noticeably shorter compared to traditional methods, going from a single year to 20 years compared to a private loan’s five year maximum. The demand for new homes is high and, with more people seeking new business opportunities or starting families, it won’t be going down anytime soon.
