Most people think that commercial real estate investing is very risky, best left to the experts. While this to some extent is true, you can buy apartment buildings with low risk. But the potential rewards are still great. Already your first apartment building will add thousands of dollars into your pockets, per month.It is well known that you can make big money in commercial real estate. But most people automatically stay away from commercial real estate. They think you must have a lot of money to get started and that it is a very risky business. The first statement is completely wrong, it is possible to buy commercial real estate with little money or sometimes even with no money. The latter statement is to some extent true, it is certainly possible to lose a lot of money in commercial real estate. But done the right way, the risks can be small while the potential rewards are great.Ironically, it is often less risky to borrow money to buy commercial property than buying your own house. Despite the fact that the money in the former case is much bigger. This is because you generally use a company to buy commercial property. Residential homes, on the other hand, are bought in your name. This means that you are personally liable for the loan. If you get into financial trouble and can not keep up the repayments to the bank you could lose the house but still owe the bank money. And you could be forced to keep on paying off the debt for many years to come.When you use a company to buy a property, the company is liable for the loan. You are not personally liable for the money. This means that if the investment turns out to be a disaster, the company will go bankrupt and the bank will take the building. But your personal wealth is protected. Of course you lost whatever money you put into the deal and into the management of the property. But that is it, you are under no obligation to pay any of the company’s debts. Needless to say, this is under the assumption that nothing illegal has been done. If the purpose of the company was to create fake deals in order to fool banks to lend money, you will be in big trouble.
Lending For Apartments and Small UnitsMost of us dream, as soon as we start to earn a living, to own a home of our own. While owning a large bungalow or a villa would be the perfect dream, we need to start somewhere and one of the simpler real estate dreams to fulfill would be the purchase of an apartment with the help of a loan.Apartments are great investments in this modern world for several reasons, as it is a type of property that is easy to own, lease and maintain. However, even to own an apartment of your own, most of times you would need to take a mortgage or loan from a bank or financial institution. And, these organizations are far more conservative in lending for investment loans after the recent recession. Hence, when you need to buy an apartment you would need the best advice that we can offer, to be able to fulfill your dream of owning an apartment.Keeping it all realisticOne thing to keep in mind while taking investment loans for buying apartments is that banks do not fund any property that does not have property insurance. And to be eligible for property insurance, there are some regulations that the property must usually be a minimum of fifty square meters. Hence, most student apartments, studio apartments and hotel conversions might become ineligible for a property loan or even an investment loan. Another important factor in deciding whether an apartment can be funded or not is the number of apartments in a development that are insured. A bank might put a limit of twenty five percent or a fixed number on the total units that can be funded in a development.In some circumstances the bank might ask for additional security if the bank is not convinced about the quality of the unit or apartment loan. Hence, a broker or an agent can help you overcome these issues by providing appropriate solutions about the loan. The required deposit may be more than other properties as a reflection of the perceived risk the bank may think they are taking on. They might also just scrutinize your application more than normal also. Once again, if its a good property the application should be ok.It’s a complex scenario for apartment lending however if it’s somewhere you really desire or a great looking investment that stacks up it could be worth pursuing.