Month: January 2023

One of the most common questions from people considering real estate investing is whether they should focus on residential or commercial properties. There are many factors to consider when making this decision, but here’s a quick breakdown of some of the significant differences and benefits of both real estate investing avenues.

What Is Residential and Commercial Real Estate? 

Residential real estate is all single-family homes and one to four-unit rental residences. Duplexes, townhomes, and quadruplexes all make up residential real estate. These properties are typically leased and sold to individuals and families and often have less tenant turnover. This means that residential real estate can be more predictable but also tends to see lower returns. 

Commercial property is anything with five or more units. Retail, industrial, office, self-storage, larger multifamily (of 5+ units), hotel, and others are considered commercial real estate. Commercial properties are typically leased to businesses or corporations and see higher returns at greater risk. 

Benefits of Investing in Residential Real Estate

1. Cost to Get Started

Residential real estate is generally more affordable than commercial real estate, allowing anyone the opportunity to invest. This lower cost of entry means investors can develop their businesses and grow their wealth while not taking on a project that requires more capital or experience than they have. Investment clubs allow investors to learn and grow without taking too much risk. 

2. Stability

People will always need somewhere to live, right? Investing in residential real estate may let you reach buyers and renters from a large pool to find the best tenant for your rental or the highest bidder for your rehab. With an excellent tenant screening and rental management system, your property can stay rented and cash flow for the long term. And while every investment carries risk, residential real estate performs better than commercial real estate during an economic crisis, as housing is always in demand.

Benefits of Commercial Real Estate Investing

1. Better Returns

The greater the risk, the greater the reward, right? Commercial properties tend to have higher acquisition costs and are more at risk during economic downturns. Properties tend to be larger and more complex, with the success of the investment tied to the success of the businesses that occupy them. However, the opportunity to add value to properties through re-tenanting or redeveloping may generate serious returns through just one deal. 

2. Qualified Tenants with Triple Net Leases

Anyone who owns a rental knows that finding tenants who will care for a property like theirs can be a challenge in residential real estate. A commercial property attracts business owners and corporations with a vested interest in their place of business looking its best and tends to respect a property. Commercial real estate lease contracts are often Triple Net Leases, which means the lessee must handle nearly all property expenses, including real estate taxes. This takes the burden of maintaining a property off the plate of the commercial investor. 

Bottom Line

Deciding between residential and commercial real estate investing is a big decision requiring thoughtful education and planning to succeed. Consider the time you are willing to invest and the risks you can take as you evaluate which investment type is right for you today. Ultimately, residential and commercial real estate are excellent investments that may bring you closer to financial freedom.

---

Investor Loan Source, a private money lending company, provides high-quality investment property loans to private real estate investors at the lowest costs possible. Our process for providing real estate investors with private lending is unique. We place emphasis on the hard asset and value of the collateral (property) and less on the borrower. Our asset-based real estate investment loan model means we can provide more money lending to more investors than is available from standard bank loan models. At Investor Loan Source, providing real estate investors hard money loans is our business; it’s all we do. We offer several business real estate loan products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance. 

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

As the new year brings changes and uncertainty to the real estate market, it can also bring opportunities. An ongoing challenge for all real estate investors is finding investment deals, whether off-market or not. Will a changing market mean changes to the way investors find deals? There is no doubt that we will see changes in the market as a result of rising interest rates, inflation, and new technologies. Even so, marketing for deals in 2023 can include some tried-and-tested strategies as well as new, creative ways to reach potential sellers.

1. Online Marketplaces

The MLS is always an option, even with the market changes occurring nationwide. Work with a knowledgeable realtor who can send you updates from the MLS when a property that fits your criteria hits the market. Browse expired listings, and you might find a great deal. The MLS is always changing, so be sure to check regularly for new listings and updates on the status of existing listings.

LoopNet, CREXi, and other niche marketplaces are all online locations where you can find properties for sale as well. While they might not have the same selection as a traditional MLS, they can help you find commercial assets that you may want to invest in. If you’re looking to diversify your portfolio, you can find many different types of properties here. You can also search marketplaces that allow investors and brokers to connect, giving you a wider network of professionals to reach out to as you build your business.

2. Participate in Real Estate Clubs

Every week Real Estate Networking events are hosted nationwide, and you can find them easily by following other investors you know and trust as well as searching online for local REIAs. The next time you see an event, go! You will learn a lot from others in your field who have been doing this for years. Networking events offer opportunities to pitch deals, hear case studies, and learn about real estate services that can help you grow your business. You can also meet other investors and learn from their mistakes and successes. If you’re not sure how to get started with your first deal, talk to everyone you know who has experience in the field. Networking is key when investing in real estate because it helps you find out what’s going on in your area as well as connect with professionals who are willing to help you out along the way.

3. Ask Property Management Companies

Although it is not a widely used way of finding deals, connecting with property management companies is just one strategy that can prove profitable in a changing market. These companies already have insight into the asset, the tenant (or tenants), and the condition of the property. Due to their professional relationship with the owner, property management companies may know if an owner is willing to sell and can connect you if the asset fits your buying criteria. They may also be able to give insight into the lease terms and the current owner’s financial situation. Property management companies may also be able to give you a better understanding of changes they see in the local market that will help you decide about investing in the property. As always, building a network of knowledgeable real estate professionals is key to finding deals in every market. 

Bottom Line

There are many more ways to market, such as driving for dollars, direct mail marketing, and more. Having a network of real estate professionals, as well as tools and marketing strategies to find deals, are an essential part of building your real estate business. Investors will want to know how you are finding deals in 2023.

---

Investor Loan Source, a private money lending company, provides high-quality investment property loans to private real estate investors at the lowest costs possible. Our process for providing real estate investors with private lending is unique. We place emphasis on the hard asset and value of the collateral (property) and less on the borrower. Our asset-based real estate investment loan model means we can provide more money lending to more investors than is available from standard bank loan models. At Investor Loan Source, providing real estate investors hard money loans is our business; it’s all we do. We offer several business real estate loans products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance. 

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

For those looking to start investing in commercial real estate properties, basic foundational knowledge is necessary to know where to begin and how to manage such lucrative investments. Here are the four fundamentals investors should look for to find sound, sustainable, and profitable commercial real estate investments.

1. Finding the right strategy

Like residential real estate, investing in commercial properties requires due diligence. Before investing in any property, you must prepare a plan to ensure the purchase has a beneficial impact that aligns with its objectives. These complex real estate transactions will help you understand if the potential property fits the right investment strategy for your financial needs and goals.

2. Conducting the right amount of due diligence

Another significant barrier to entry when considering commercial real estate investing is not performing enough due diligence. Due diligence includes looking into the property’s financial background, the property demographics, the property class it falls under, and how many times it has been resold in prior years.

Follow commercial trends closely and learn to predict better which types of properties will be sought after. This will help you get the best bang for your buck and increase your success in real estate investing. Also, always look for new vacancies and use commercial trends to determine rent prices.

3. Understand Value Add Opportunities

One of the best advantages of commercial real estate investment is the ability to influence the value of your investments. Look at the potential for adding value by determining whether there is room for improvement.

A few questions that should be asked to determine potential value-add opportunities include:

• Can additional leasable square footage be added?
• How can rents be increased?
• How can expenses be decreased?

4. The role of property management for commercial buildings

The role of property management in commercial real estate is different from residential property management. A commercial property manager will have other responsibilities depending on the property type. 

Additionally, how much is expected from a property manager will significantly influence their pay rate. If you take a wholly hands-off or passive approach, then the cost of property management will be higher.

Bottom Line

Investing in commercial properties for beginners can be a daunting process. However, it offers several advantages, including higher income potential, lower vacancy rates, steady cash flow opportunities, and high-grade tenants. With the help of an expert and performing your due diligence, you’ll be well on your way to earning passive income through commercial real estate.

---

Investor Loan Source, a private money lending company, provides high-quality investment property loans to private real estate investors at the lowest costs possible. Our process for providing real estate investors with private lending is unique. We place emphasis on the hard asset and value of the collateral (property) and less on the borrower. Our asset-based real estate investment loan model means we can lend more money to investors than is available from standard bank loan models. At Investor Loan Source, providing real estate investors hard money loans is our business; it’s all we do. We offer several business real estate loan products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance. 

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.Categories

A good location can’t be overlooked in real estate, and it is one of the most important features determining the property’s value. However, many factors come into play to make a location good or bad. Let’s look at the different factors real estate investors should consider when choosing a location for their investment property.

1. Financial stability

Look for cities or neighborhoods with stable economies and low unemployment rates. These areas can offer more returns than others, making them the best locations for investment properties. Investors should also look for signs of growth in real estate values. Knowing the cash flow of rental properties in the area can help decide if it’s a wise financial decision.

2. Access to Public Transport

Good public transportation is one of the major factors to consider before choosing a location for property investment. If the area is easily accessible from all parts of the city, it is a good choice for investment. It benefits tenants who commute to work or school and those who need access to recreation and entertainment venues. A great public transportation system may increase the appeal of a city or neighborhood to a renter, making it an excellent option for property investors looking to maximize their cash flow.

3. Safety and Crime Rates

There is no denying the fact that people prefer living in secure neighborhoods. When choosing a community to invest in, we cannot stress enough how important it is to look at the area’s crime rate and overall safety. Real estate investors should inspect the area and ask the residents if any robbery or theft has occurred recently. A secure and safe neighborhood is often a significant factor that can impact the success of an investment property.

4. Presence of Quality Schools

Check out the quality of schools in the area. People sometimes search for an area where well-reputed good schools are located. Remember that properties near schools might be more expensive to buy, but investors would be compensated well if they generate a good rental income. 

---

Investor Loan Source, a private money lending company, provides high-quality investment property loans to private real estate investors at the lowest costs possible. Our process for providing real estate investors with private lending is unique. We place emphasis on the hard asset and value of the collateral (property) and less on the borrower. Our asset-based real estate investment loan model means we can provide more money lending to more investors than is available from standard bank loan models. At Investor Loan Source, providing real estate investors hard money loans is our business; it’s all we do. We offer several business real estate loan products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance. 

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.

In real estate investing, cash flow is the profit you bring after collecting all income, paying operating expenses, and setting aside reserves for future repairs. Depending on the case, the cash flow can be negative, break even, or positive. A real estate investor should always aim to reach positive cash flow, and here are three ways to achieve it.

1. Add New Amenities

While rental properties are vacant, they are not producing cash flow. Still, owners can undertake projects to make the property more attractive, and it may generate more monthly rental income. As you research your local rental market, find out what amenities will bring you the best long-term returns. These include replacing flooring, renovating the kitchen, and renovating the bathroom. Also, installing a washer and dryer or a dishwasher may cost some money upfront, but most renters are willing to pay more monthly for these conveniences. The improved cash flow may mean the projects pay for themselves over a measurable amount of time. Improvements in kitchens and bathrooms generally have a better return on investment.

2. Increase the Rent

Owners of rental properties that provide an excellent place to live shouldn’t shy away from steady rent increases. Many rental property owners fear that residents will leave if they raise the rent, but if the increases are reasonable, residents may find that moving outweighs the costs of staying. If you already have tenants, don’t change the rent for all of them at once. Wait to make increases until it is time for each tenant to renegotiate their lease. If you can, avoid making significant increases during holidays or trying times. This will help you to stay on good terms with your tenant and keep your property occupied and earning income.

3. Decrease Expenses

In addition to increasing income, decreasing monthly costs will also keep your cash flow healthy. Examine your budget for what you are willing to give up to save money. To do this, it is necessary to identify the highest expenditure items and to reduce them. You can take action on the rental charges that are not billed to the tenant. This could be the heating, the electricity or the internet. It is also essential to compare the prices when choosing a craftsman for repairs, as the expenses caused by the work affect the amount of your cash flow.

---

Investor Loan Source, a private money lending company, provides high-quality investment property loans to private real estate investors at the lowest costs possible. Our process for providing real estate investors with private lending is unique. We place emphasis on the hard asset and value of the collateral (property) and less on the borrower. Our asset-based real estate investment loan model means we can provide more money lending to more investors than is available from standard bank loan models. At Investor Loan Source, providing real estate investors hard money loans is our business; it’s all we do. We offer several business real estate loan products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance. 

To learn more about Investor Loan Source, visit our website or follow us on LinkedIn, Facebook, and Twitter. To apply for a loan, click HERE.