READY FOR A NEW CHAPTER IN COMMERCIAL REAL ESTATE INVESTMENT
Faced with persistent uncertainty, a sluggish recovery, and a difficult investment climate, investors are eager to move forward and embrace change – a sentiment captured in the annual “Expectations & Market Realities in Real Estate 2013—Turn the Page” report, jointly published by the National Association of Realtors (NAR), Real Estate Research Corporation (RERC), and Deloitte. The report suggests that investors have accepted the endurance of the current market conditions, recognizing that they may need to adjust their strategies to optimize performance and yield in sluggish economies. One such strategic shift includes the wholesaling of commercial real estate.
CAPITALIZING ON WHOLESALING COMMERCIAL REAL ESTATE IN 2013
Investors have increasingly turned to wholesaling commercial real estate in 2013, excited by the prospects of significant, swift profits. How is the commercial real estate market evolving now? What opportunities should you seize this year? Stay tuned to find out.
THE CASE FOR WHOLESALING COMMERCIAL REAL ESTATE IN 2013
The healing process for commercial real estate, battered by the bubble burst, trailed its residential counterparts, taking a bit longer to regain its vitality. Consensus, however, maintains that the commercial market has hit rock bottom, found stable footing, and is now prepared for growth.
The present rate of economic growth may be modest, but there are plenty of elements propelling the commercial property industry. Emerging companies are securing spaces for launch, while expansive, established organizations are reshaping their bases significantly, no longer bound by talent and technology shortages. Investors worldwide are directing their funds toward the development of commercial properties.
This trend underlines the surge in demand and the escalating prices businesses and investors are willing to pay for extra space. They are eager to maximize returns before cap rates narrow and interest rates climb. Concurrently, mortgage lenders are likely to trigger foreclosures on properties as demand and value rise — an environment ripe for wholesaling commercial real estate that promises considerable, quick gains.
UNDERSTANDING THE DIFFERENCES
When wholesaling commercial real estate properties, it’s important to note three key differences from wholesaling single-family homes.
FINANCING
Commercial property mortgages function differently from residential ones. They’re easier to obtain presently and hinge more on the property than the borrower. The underwriting process for such loans appears to be lightening just as it grows strenuous for residential investors.
MARKETING
Venturing into multifamily housing, industrial or retail properties, and offices speaks to a very different demographic than single-family homes. Understand their needs and values, and figure out the best ways to reach them.
DUE DILIGENCE
This area also offers a different dynamic. The factors you consider and lender requirements, such as environmental reports, rent rolls, and appraisals, may differ. Understand these differences to succeed.
WHERE TO INVEST?
Before investing in commercial real estate, scout for distressed properties, non-performing loans, struggling tenants, and locations near transport hubs, large businesses, or areas with government initiatives.
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