Whether a person is looking for an investment or a business opportunity, the current commercial real estate market remains in flux due to an uncertain economic climate. This impacts financing for both the buyer and seller of properties.
This environment also increases the difficulty of identifying desirable properties to purchase.
Commercial real estate investment concerns
As always, timing in a real estate venture remains critical. Kiplinger cautions that investors should view a real estate transaction as a long-term proposition. Uncertainties in the current market include the following:
- A sluggish economy
- High unemployment
- An altered financing environment
- The uncertainty of rent collections
All of this makes investing in real estate a challenge, but not one without potential for good deals. Investors should always practice due diligence and look for opportunities and if possible have the capacity to move quickly. They might want to consider purchasing properties at the end of their financing term. Even in distressing times, opportunistic buying can yield favorable deals.
Forbes suggests some creative financing options for real estate, and while the article focuses on the home market it also applies to commercial real estate. The following four methods offer possibilities for buyers and sellers:
- Seller or owner financing
- Lease options
- Short sales
Each of these options has advantages for buyers. This can include the elimination of the need for going through a bank, or the ability to negotiate a lower selling price. In a leasing situation, the buyer has the opportunity to use the property and then purchase it at a later date. The right financing option, whether it is a traditional or alternative one, can make or break a deal.