Finding a Residential Property

Your first job is gathering information about property management companies operating in the area you are looking to invest in. Remember, that this field is filled with frauds; so, before picking the property management company, never forget to perform detailed research. Opt for a company that enjoys great reputation. A great way of knowing what people think about the firm is checking the Internet. You can also seek suggestions from your friends and relatives when it comes to picking the management firm.

The next step should be talking to the bank. Of course, you will not need to do this if you have enough money ready to invest and if you don’t want to take a bank loan. However, for people who need a bank loan to invest, this step is extremely important. The bank will inform you about the maximum amount you can get as a loan. This will make your search for a property easier as you will know your financial capacity. The technical term used for this step is getting pre-qualified.

The third step is possibly the most important one. In this step, you will need to decide on the location you want the property to be in. Perform a thorough research to gather information on areas that have experienced maximum growth in the past ten years. If the property management company you are working with is a reputable firm, they will do this research on your behalf. Keep in mind that properties located in educational and commercial hubs of the country are the most lucrative ones. Ideally, you money should be invested on a land, home, or apartment located close to the market, school, college and last, but not least the highway.

It’s true that the management firm hired by you will ensure you get the property for the best price, but we would advise you to be ready for bargaining. However, never overdo things when bargaining. This is because when you will try to sell the property after one or two decades, the additional money spent by you when purchasing the property will not matter much.

Purchasing Industrial Property

Return

Residential property investment is actually relatively low risk and as a result, low return. Commercial property includes a higher return but this comes in a higher risk. For instance, a flat or device will average a come back of 5% whereas commercial property, such as the warehouse, may average 8%.

Danger

The higher risk comes as higher vacancy rates. Let’s make use of the warehouse example. It could take a while to locate a new tenant for the actual warehouse, many months and possibly greater than a year. Conversely, finding a brand new tenant for your residential property will require generally a week or even two.

Duration of rents

Residential leases tend to become for six or 12 several weeks. However, commercial property leases are usually for a much longer time period. It is not uncommon to possess leases that are to have an initial five-year period, using the option to renew with regard to another five years, after which another.

Quality of renter

The tenant is obviously an important part of your home investment. In commercial home, a government or large corporate tenant is recognized as a ‘blue chip’ renter. They are likely in order to rent your property for a long time of time and tend to be unlikely to default about the rent.

Economic performance

As with any form of home investment, the economy is essential to your financial wellness. At the moment along with consumer and business self-confidence at all-time lows, there are lots of businesses that have in order to close. If your building has one of these simple businesses as a single tenant, you could face some very difficult times. On the additional hand, residential property is fairly resilient with regards to the economy. The worst that can happen is that it takes an additional week or two to locate a tenant or you might have to drop your asking lease by $5 or $10 each week.

High cost of admittance

Buying commercial property is usually much more expensive compared to buying residential property. CBD office or retail space is usually the most expensive room, due to its surrounding area. Industrial property on the actual outskirts of the locality may also be expensive due to size from the property being purchased. Expenses, however, can be reduced by purchasing smaller strata name premises.

Maintenance costs

Improving a residential property is actually relatively cheap. A fresh paint job, new floor covers, kitchen and bathroom can cost less than $20, 000. Refurbishing the commercial building, however, could be a very costly exercise. Brand new air-conditioning, upgrading the building to meet new safety and health standards and refits may cost tens and sometimes thousands and thousands of dollars. However, the expense are rarely borne through the owner.

Outgoings

One of the benefits of being an owner associated with commercial property is how the tenant usually pays the majority of the outgoings, such as local authority or council rates, insurance, repairs as well as maintenance. This means that the majority of the rent collected by the owner has the capacity to be kept unlike the problem with residential property in which the owner uses the rent money to cover rates, taxes, maintenance as well as repairs.

All the information on who pays the expenses, how much rent is actually owed, how often it’s increased is all outlined within the lease.

The lease

This is actually the most important document with regards to commercial property. Unlike a residential lease that is commonly a standard record and about four webpages long, commercial leases in many cases are 50 to 60 pages long, are not standard documents and generally require a solicitor to draw all of them up. Read the lease carefully and if you’re unsure of anything, ask a lawyer to explain it for you.

Ensure the Future of Your Property

  • Buy at a cheaper rate – It is said that one makes more money when he/she buys than when he/she sells. But buying at a cheaper price is a great way to curtail risk. Well, the reason behind this is very simple. You invest less capital, gather fewer liabilities, and you set yourself in a position to grab a higher yield as compared to the purchase price. This stands true for property investment too.
  • Ensure an updated will – You should have an updated will. This is to ensure that your assets are distributed as per your wish. This gives you great piece of mind and there is crystal clear clarity in terms of who gets what from your property.
  • Get income protection insurance – If you are a property investor who is contractually employed or are self-employed, your income does not enjoy the same stability as that of a permanent employee. One great way to ensure the stability of your income is to take out income protection insurance. This makes it possible to receive a certain income if you are unable to work due to any reasons. This might be possible in some countries, but wherever possible, it should be done.
  • Use property management services – There is no such thing as: one size fits all, when it comes to effective property management. Join hands with a good company that provides property management services. They will understand your property and your unique situation to unleash the true potential of your property in future.
  • Be an alert landlord – We have heard many stories of how tenants have misused the property they have rented. To avoid this in your case, take a proper deposit before you give out your property on rent. Make a registered lease agreement with all conditions mentioned clearly. Always be on a look out of any news regarding any tampering with your property and take immediate actions. Once the lease agreement expires, make a new one immediately without any delay.
  • Always keep a buffer – The best way to ensure that you can get cash quickly when you need is to have some cash on standby. Cash is a liquid asset and a ready source of supply is one of the best risk management strategies.

Mortgage Rate Forecasts

One thing that consumers are very keen on paying attention to is mortgage rates. Recent research has indicated that a consumer will begin researching rates months before they finally pull the trigger and decide on a loan. If you are looking at buying a home in the near future, or you are just someone who likes to stay on top of the trends, you should pay close attention. Below, we will go over some predictions and projections from a few expert sources.

Freddie Mac is, in short, a federally backed company that deals in the purchases and sales of mortgage securities. Since 1971, Freddie Mac has released a weekly report of lending trends. Recently, the interest rates on 30-year loans were at 4.53 percent according to this publication. This figure continued to drop significantly to an impressive 4.1 percent interest. While the current numbers look good for potential homebuyers, Freddie Mac is projecting these figures to climb back up to 5 percent as time continues to pass. It is important to note that the increase in rates is just a projection based on observable market trends. Also important to keep in mind is that the increase in mortgage rates will occur over time and not all at once.

Unrelated to Freddie Mac is the Mortgage Bankers Association, which has also made projections for the coming future similar to those made by Freddie Mac. They also predict interest rates gradually rising to a 5 percent plateau.

An esteemed economist, Dr. Bill Conerly, projects an even sharper increase in rates for the foreseeable future. His forecast has this figure topping out around the 6 percent range. But, Dr. Conerly is not overly concerned about this rise, and he doesn’t believe the public should be either.

The Home Buying Institute, however, does not see these figures getting much higher than they already are. They claim that some of the more dire predictions are focused on the state of the Federal Reserve. As you should know, the Federal Reserve is winding down and eventually completely stopping their economic stimulus incentives. These stimulus incentives were put in place amidst a severe economic crisis in 2008, and the fact that the Reserve is finally comfortable easing out of the programs speaks volumes to Dr. Conerly’s assertion that the economy is getting stronger.

Making an Offer on Commercial Property

The first tip we have for you is to determine what your needs will be. You may want to create a checklist of those needs you deem to be essential. These needs include how much space you will need, how much parking space you will need, and will you need a lot of storage space. Perhaps the most essential need will be for a prime location near major highways and/or public transportation. There will be somethings you think you need but that you really can do without. Maybe once you have met your essential needs, you can also consider some of these. However, keep these on the back burner for budgetary reasons.

That brings us to our next tip; your budget. Every business typically has a budget; especially when it comes to a major expense such as moving. You will want to know what you can expect to spend on your new property. Also will you be renting it or buying it? Those are major factors in negotiating your commercial property deal. You also ought to compare the costs of the different properties you are looking at and how they stack up against each other. You are going to want to do some studying on this subject.

One crucial tip we have for you is to know what the laws and regulations are that govern where you will have this property. For example there are neighborhoods that permit commercial properties in largely residential areas. However, the majority of neighborhoods either feature one or the other. This is especially important to know if you are downsizing your office and looking to run your business out of your home. Even if you are looking for a commercial building; it is still important to know if any local ordinances will affect your business BEFORE you sign a lease or buy the property. It might also be wise to seek the advice of a local real estate attorney on this matter. Better safe than sorry.

One last tip we will leave you with is to know what you are doing. Do your homework before you even begin to look at making an offer on a commercial property. The tips we have provided here are just the tip of the iceberg. There are more where these have come from. You can go onto the Internet and do a search. You will find links to articles such as this one that ought to prove helpful. Additionally you may want to contact a realtor that specializes in commercial property. He or she can give you some excellent advice.

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