Home Prices are down. Great!
Just because there is a huge inventory of homes on the market does not mean that as investors we can’t make a dollar! (Or a few thousand) As the housing market slumps, apartment complexes and duplexes typically swing into high gear. Profits are through the roof as several complexes have been raises rents steadily for the last two years.
But what about Commercial Properties?
It all depends on the area. Location is extremely important for commercial real estate as businesses are looking for foot-traffic (number of people walking in front of their door), expandable space or desirable neighbors. (How nice would it be for a tech start up to sit in an office building right next to Microsoft, Apple or Google?)
Right now, commercial real estate is dropping as demand decreases, prices decrease and inventories increase. Your best bet for profits now are to look towards lease-options or other similar purchase agreements. Here, you can control the building with the promise of buying it at current price levels. And in 3 to 5 years from now, refinance the building, sell it or increase lease amounts on your tenants. Any of these options will increase your future profits on a deal you today.
