So you are interested in buying commercial real estate property but you don’t have a lot of money, how do you do this? We will look at some possibilities in this article.
One option; if you don’t have a lot of money to put down on some property, is to use a master lease. What is a master lease? They actually have been around for many, many years. It is basically a lease with an opportunity to buy the property in question down the road. It is typically used when buying homes but can also be used in the purchase of commercial property. Another advantage to using a master lease is your terms and prices are at a fixed rate. The seller will only receive a monthly payment from you. All of the positive features of this type of arrangement are yours to keep.
Another way you can buy commercial real estate with little financial resources is to use what is called a SBA-504 loan. This type of loan has a very low down payment, usually around 10% down. Then you can borrow the remaining 90% from a reputable lender. The big advantage of doing this is that you can save your cash for other business needs you will encounter. This type of loan also has a fixed, below-market average, interest rate, which will also save you a lot of money in the beginning.
There are also methods of doing this known as “alternative strategies.” That can simply be put as using “other people’s money.” There are sub-strategies involved with this including: business partnerships, contract assignments, hard money, lease options, owner financing and several others. Before going forward with any of these options, it is wise to consult an existing expert and have an attorney present.
One type of expert you should consult is known as a bird dog. They usually get a referral fee paid to them at the close of your deal. Their main objective is to find excellent deals for investors. Many people start their commercial investing careers by using bird dogs. A bird dog is NOT a real estate broker or agent and will often have a joint-venture type of partnership with one or more other people.
Another very attractive way someone can purchase commercial property with little money is to let the seller act as the financial institution. THEY can lend the money to the buyer and received a mutually agreed upon amount of money each month from the buyer. The seller could even carry a variable-rate or a fixed-rate interest payment, which the buyer would also be responsible for paying. This CAN BE a risky venture though in many ways. It is a good idea to do your homework. Not only on this kind of an arrangement, but with regards to the seller. There are educational resources you can use; either in person or over the Internet. Know what and whom you are dealing with at all times.
Please contact us at Tazar If you looking for a Back Bay real estate or if you’re looking for a Boston apartments.
Thank you for reading.
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