Many people are led to believe that to own commercial property you must be a “seasoned” investor.
However, nothing could be further from the truth. In fact, many commercial properties require LESS down than a residence, due to what is called a “cash flow” sheet. Banks consider commercial properties to be like a business, therefore making them easier to purchase in many situations.
There are benefits to owning commercial versus residential property. They can be more lucrative deals, you need few properties to make millions, and the tenants are more responsible.
In this article I will be going over these reasons in full detail. Yes, you can make money buying residential properties, but buying commercial will prove to be more profitable in the long-run.
#1 – More Lucrative Deals
The reason that buying commercial buildings can be more lucrative is because instead of getting one payment, you are getting MANY of them. After all, why put so much of your time and effort into a real estate deal when you are only going to get one payment every month?
Why not get 30-100 instead? You will better leverage your time by making a larger deal buying a building, instead of buying a home. On top of that, the process will take the same amount of time to close, if not less.
And if you are renting out a single-family home or a condo, and the tenant fails to pay their monthly rent, YOU have to pay it. If you have a 30-unit apartment building, and two or three tenants fail to make a payment, you will still be profitable!
This by itself makes buying commercial property a pretty good investment, don’t you think?
#2 – Fewer Properties Are Needed to Make Millions
So how many single family homes would you need to purchase to make a profit of $1,000,000 per year? Let’s just say, A LOT! And how quickly could you purchase all those properties, and keep track of all the tenants, maintenance, expenses, etc?
It would be so mind-numbingly painful you would end up ditching many of them, I’m guessing. And all the driving around you would have to do (or pay someone to do) would add a lot of extra expense to the situation.
On the other hand, if you owned just 5 apartment complexes with 50 units you could make a whole lot more with a lot less hassle! Let’s do the math here. 5 complexes times 50 units = 250 units. Let’s just say you averaged $450 a month per unit, which is very affordable. 250 x $450 would net you a whopping $112,500 per month! $112,500 times 12 months = $1,350,000 a year!
And after paying expenses such as property managers, landscapers, maintenance, etc. you would still be a millionaire at the end of the year. Now how great would that be?
#3 – Tenants Are More Responsible and Reliable
When dealing with a business owner over a renter, the difference is like night and day! Most business owners consider their business their livelihood, and rent is part of their business expenses.
If they are late on the rent, they risk losing a lot of lost business, and that is not something they want to do! On the other hand, we’ve seen how many home renters will treat the place they live in. And if they get kicked out?
Oh well, there is someone around the corner waiting to rent to them. So this is not much of an issue to the average house renter.
In addition, the average lease for a commercial office space is between 3-5 years. Many businesses will not opt out of this unless their business is going down the tubes. And at the same time, many homeowners will get a 6-month to 1 year lease.
It’s been seen many times that renters are willing to just move out of a house and will not pay their rent. There is very little a landlord can do at that point, except take them to court. Sometimes that doesn’t even get them the money they are owed!
So as you can see there are clear benefits to owning commercial property. And it can end up becoming a very good deal if you do things right. As always, do your due diligence before getting into any deal that you might end up regretting later.
Purchasing commercial realty property is not IMPOSSIBLE for the average investor to attain, it just takes having some specific goals, and taking action.
With that, you too can become a millionaire in commercial real-estate!
If you are looking for a private money loan in the Phoenix metro area for a commercial or residential property, please make sure you call the "Two Mikes" at the LM2 Investment Group by clicking here.
LM2 Investment Group
Hard Money Lenders
9160 E. Bahia Dr. Suite 105
Scottsdale, AZ 85255
480-444-2242
However, nothing could be further from the truth. In fact, many commercial properties require LESS down than a residence, due to what is called a “cash flow” sheet. Banks consider commercial properties to be like a business, therefore making them easier to purchase in many situations.
There are benefits to owning commercial versus residential property. They can be more lucrative deals, you need few properties to make millions, and the tenants are more responsible.
In this article I will be going over these reasons in full detail. Yes, you can make money buying residential properties, but buying commercial will prove to be more profitable in the long-run.
#1 – More Lucrative Deals
The reason that buying commercial buildings can be more lucrative is because instead of getting one payment, you are getting MANY of them. After all, why put so much of your time and effort into a real estate deal when you are only going to get one payment every month?
Why not get 30-100 instead? You will better leverage your time by making a larger deal buying a building, instead of buying a home. On top of that, the process will take the same amount of time to close, if not less.
And if you are renting out a single-family home or a condo, and the tenant fails to pay their monthly rent, YOU have to pay it. If you have a 30-unit apartment building, and two or three tenants fail to make a payment, you will still be profitable!
This by itself makes buying commercial property a pretty good investment, don’t you think?
#2 – Fewer Properties Are Needed to Make Millions
So how many single family homes would you need to purchase to make a profit of $1,000,000 per year? Let’s just say, A LOT! And how quickly could you purchase all those properties, and keep track of all the tenants, maintenance, expenses, etc?
It would be so mind-numbingly painful you would end up ditching many of them, I’m guessing. And all the driving around you would have to do (or pay someone to do) would add a lot of extra expense to the situation.
On the other hand, if you owned just 5 apartment complexes with 50 units you could make a whole lot more with a lot less hassle! Let’s do the math here. 5 complexes times 50 units = 250 units. Let’s just say you averaged $450 a month per unit, which is very affordable. 250 x $450 would net you a whopping $112,500 per month! $112,500 times 12 months = $1,350,000 a year!
And after paying expenses such as property managers, landscapers, maintenance, etc. you would still be a millionaire at the end of the year. Now how great would that be?
#3 – Tenants Are More Responsible and Reliable
When dealing with a business owner over a renter, the difference is like night and day! Most business owners consider their business their livelihood, and rent is part of their business expenses.
If they are late on the rent, they risk losing a lot of lost business, and that is not something they want to do! On the other hand, we’ve seen how many home renters will treat the place they live in. And if they get kicked out?
Oh well, there is someone around the corner waiting to rent to them. So this is not much of an issue to the average house renter.
In addition, the average lease for a commercial office space is between 3-5 years. Many businesses will not opt out of this unless their business is going down the tubes. And at the same time, many homeowners will get a 6-month to 1 year lease.
It’s been seen many times that renters are willing to just move out of a house and will not pay their rent. There is very little a landlord can do at that point, except take them to court. Sometimes that doesn’t even get them the money they are owed!
So as you can see there are clear benefits to owning commercial property. And it can end up becoming a very good deal if you do things right. As always, do your due diligence before getting into any deal that you might end up regretting later.
Purchasing commercial realty property is not IMPOSSIBLE for the average investor to attain, it just takes having some specific goals, and taking action.
With that, you too can become a millionaire in commercial real-estate!
If you are looking for a private money loan in the Phoenix metro area for a commercial or residential property, please make sure you call the "Two Mikes" at the LM2 Investment Group by clicking here.
LM2 Investment Group
Hard Money Lenders
9160 E. Bahia Dr. Suite 105
Scottsdale, AZ 85255
480-444-2242