Brian Fielding of Fielding Investments Reveals Essential Information for Purchasing Commercial Real Estate
When an individual or company is thinking about investing, they need to consider the options before them. Many investors who would like to invest in the real estate market usually gravitate toward residential real estate. Residential real estate tends to be more familiar territory, and more sentimental, which draws in many interested investors. However, Brian Fielding of Fielding Investments shares that investing in commercial real estate also has its advantages, and right now, with the market prospects showing strong signs for the rest of the Year, it is an optimal time to consider the advantages of commercial real estate. However, before making a purchase, utilize this knowledge about the market and this compelling comparison of the residential and commercial real estate from expert Brian Fielding.
- Commercial real estate is generally more financeable: When investing, it is important to remember that a commercial real estate transaction is viewed very differently than a residential real estate one. Commercial assets are not only financeable with traditional lenders; there are a wide variety of other sources such as insurance companies that are eager to hold a security interest in quality commercial and retail properties. Further, one can expect to be able to obtain greater leverage from those lenders if the tenant base is well credited. In fact, it is not unusual to find lenders who will consider non-recourse [no personal guarantee other than for traditional carve-outs] and financing of up to 70 -80% for assets that have strongly credited tenants with long term leases.
- Commercial real estate historically tends to be more profitable: In most cases, when an individual invests in residential real estate, they are renting to individuals who are likely not sufficiently financially strong enough to purchase their own home. Commercial real estate, however, has potential for a much broader range of tenants including many that are very creditworthy. A building with multiple retail, industrial, and office spaces allows for a greater diversity of tenant mix. The loss of a single tenant does not impact the investor as seriously since that loss will be only a fraction of the property’s total income.
- There are several factors that determine value: While the basic maxim of real estate, “location, location, location,” applies to both commercial and residential property, commercial assets are more easily valued and financed than the somewhat equivalent residential property. Most lenders are willing to establish value and finance accordingly based on recognized indices such as cap rate and internal rate of return when considering commercial assets.
With knowledge of how commercial real estate is different from residential real estate, and what factors need to be considered when investing, Brian Fielding and Fielding Investments know that investors can make informed decisions about how, when, and why they should invest. For more information on real estate investment visit http://fieldinginvestments.com/.