Real estate is one of the most reliable investments you can make. It’s a good idea to consider investing in real estate because it can offer you several benefits. For one, real estate usually appreciates over time, so you can potentially make money by selling it for more than you paid for it.
Additionally, rental properties can provide you with a steady source of income, which can be helpful if you’re looking to supplement your income or build up your savings. There are two main types of real estate properties: residential and commercial.
Residential vs. Commercial Properties
Residential properties are typically used for housing, while commercial properties are used for businesses. Residential properties usually have one or two bedrooms, while commercial properties can have dozens of offices. In addition, residential properties typically have a kitchen and a bathroom, while commercial properties often have a break room and multiple bathrooms.
The size of the property is usually smaller for residential properties, while commercial properties can be huge. The property’s location is also generally different for residential and commercial properties.
Residential properties are typically located in neighborhoods, while commercial properties are often found in business districts. Because of the current prices of homes, commercial properties are becoming the primary option for investors. However, it’s not easy to finance your first commercial property purchase. Here’s what you need to do to make your first investment in commercial property.
Get the Necessary Funds For Your Purchase
First, you’ll need to ensure that you have the necessary funds to finance your purchase. When buying a residential property, most people use their savings or borrow money from family or friends. However, this isn’t typically the case when purchasing commercial real estate properties because banks and other lenders have more stringent requirements for these types of loans.
To ensure that you’re able to get approved for a commercial loan, it’s vital that you have good credit and can provide proof of income and adequate collateral. If your credit score is lower than expected, consider improving your credit score so that it’s easier for you to secure financing. Additionally, work on increasing your income to prove that you are capable of making loan payments.
Moreover, for progressive countries and cities you can get a money lender like in Singapore. This tiny powerhouse have many lenders willing to give you the necessary funds for your first investment.
Choose the Right Property
Just like with residential properties, it’s essential that you choose the right commercial property to invest in. When looking for a commercial property, consider the location, size, and type of property. The location is essential because it will impact how easy it is to find tenants and the amount of rent you can charge.
The size of the property is also important because it will determine how much you’ll need to spend on renovations and repairs. Additionally, think about what type of business would be a good fit for the property. For example, if you’re looking to open a restaurant, you’ll want to ensure that the property has a kitchen and enough space for dining tables.
Furthermore, you should also consider the zoning laws for commercial property because these areas often have restrictions that impact what type of business can be located there. For example, some commercial properties may only allow retail businesses or office buildings.
Work with a Real Estate Agent
To find the right property and navigate all the other details involved in buying your first commercial real estate investment, it’s best to work with a real estate agent. These professionals will be able to help you find suitable properties as well as guide you through the entire home buying process from start to finish.
They’ll be able to negotiate on your behalf so that you can secure a good deal when buying your property. Additionally, they’ll provide advice and recommendations based on their experience and expertise.
Get a Property Inspection
Before you finalize your purchase, it’s important to get a property inspection. This step is often overlooked when buying residential properties, but it’s essential when buying commercial real estate. A property inspector will be able to identify any potential problems with the property that you may not have been aware of.
For example, they may find issues with the wiring or plumbing that must be fixed before you move in. Additionally, they’ll be able to tell you if there is any water damage or structural problems.
Obtain the Necessary Permits
Once you’ve chosen your property and are ready to move forward with the purchase, you’ll need to obtain the necessary permits. Depending on the state that you live in, you may need a commercial property permit as well as other permits related to the type of business that you plan to open.
Additionally, if you plan to make any changes or add-ons to the property, such as renovating it or adding more parking spaces, it’s important that you obtain the proper permits for all of these changes. Otherwise, your plans could be halted due to zoning laws and regulations.
Commercial properties are a great investment for anyone looking to generate passive income. By following these five steps, you’ll be able to buy your very first commercial property and start generating rental income from it. Just make sure that you carefully research the property before making any commitments and work with a real estate agent who can help you through the entire process.