Commercial Properties

The crisis in the housing markets has affected more than just ordinary homeowners. According to recent reports, businesses are closing their doors’ at a record pace. While larger businesses often have the money and foresight to act preemptively and close stores that fail to turn a proper profit, small businesses don’t have that luxury. Which is why even when things get bad, may small business owners try to hold out as long as they possibly can. But when it gets to the point where they cannot afford to pay their mortgage, the bank will often step in and foreclose on the property.

As business slows and unemployment numbers climb, this unfortunate process is being carried out tens of thousands of times a day in America. While foreclosure may spell the end of one small business owner’s dreams, it may be just the opportunity another business needs to grow and expand their business.

What is commercial real estate?

Commercial real estate is any property that is officially classified as a business. This includes offices, restaurants, shopping malls, hotels and even apartment buildings. Since the performance of these businesses is so closely tied to the economy, when a recession hits and unemployment goes up, they often have trouble paying their mortgages. This has created a commercial real estate market that is said to be in the process of “bottoming out” and one that is not expected to recover anytime soon.

Why you should buy commercial real estate?

As we mentioned, when a business can no longer afford to pay for its mortgage, the bank or lender steps in and repossesses the property. But banks do not like getting involved in the real estate market, especially when that real estate is of the commercial variety. For one thing, the costs of maintaining a commercial property are far greater than those associated with maintaining a residential property. Not to mention that fact that commercial properties are often much more expensive and therefore harder to sell. This puts the bank in a difficult position, and many of them are so desperate to recoup at least some of the money they lost in the initial loan that they will offer the commercial property at near fire sale prices.

If you are a business owner who is considering expanding your business but you don’t want to put your name on a lease, this may be the perfect opportunity for you to own your own commercial property.

Why you should stay away from commercial real estate at this time?

The crisis in the housing market hit the residential real estate market faster and harder than it hit the commercial market. This may be a clear indication that there are more losses and harder days ahead for commercial real estate. It is also true that the banks are no longer giving out many commercial loans. So if you don’t have enough money on your own to purchase property, you are most likely out of luck.

If, however, you do decide to go ahead and purchase commercial real estate, it is best that you do quite a bit of research on the subject. You can always find commercial real estate listing in the classified section of your local paper or on a number of reliable internet websites.

Commercial real estate also includes apartment building, and with occupancy rates in many cities at record lows, which in turn necessitates lower rents, many apartment building owners can no longer afford to pay their mortgages. This has forced thousands of owners into default. When a business or apartment building defaults on their mortgages, the bank or lender has no other option but to repossess the property and try to sell it on the open market.

When a business closes shop it is always a very sad day. Not only do the owners lose their dream, but their staff must also search for new jobs. If the business was a large one, it can even affect an entire community. But if we look we can still find a silver lining. For when one business fails, it gives another the opportunity to succeed.

Due to the current economic crisis, many dreamers have been given the chance to start their own businesses at a fraction of the prior price. Since commercial lenders lost so much money on the initial loan to the company that defaulted and they are desperate to make up the difference, they will often sell the property at a deep discount.

Whether you decide to open you own business or to rent out the space out to another business, buying commercial real estate at this point in time is a great investment. In fact, many businesses who are expanding have taken advantage of this unique opportunity to buy a new location rather than lease.

Renting out the space to another business is also an attractive option. Since most commercial foreclosures offer competitive payment plans with low interest rates, you could end up making a healthy return on your investment. Renting the space also gives you another consistent source of income, which will likely increase.

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