I am in the business of buying, fixing, leasing and selling single family detached residential properties. I’ve been doing this for 8 years now and have the model down to a science. Many investors that we work with ask me if I would sell multi-family or commercial properties, and my standard response is that we stick to what works … and for my day to day business, that’s single family.
With that said, I have personally invested in two commercial properties this year. Granted, I didn’t have much experience with commercial before this time, but what I’ve found to be quite interesting is the ease with which I’ve been able to finance and purchase these deals.
The first property I bought was a 10,000 square foot office/warehouse combination. This purchase was made in conjunction with one of my vendors who plans to lease a good portion of the building. Interestingly, the cash flow is stronger than an average single family deal and the financing was much easier to obtain than a conventional loan. For this particular property, I was able to work with a local bank on the financing side (with terms not too different than a conventional loan). One of the big differences, however, is the personal underwriting style of a local bank – in stark contrast to the rigid, in-the-box approach that conventional lenders take.
The second commercial property I just closed on is a large 8 acre storage facility. This property had been foreclosed a year ago and we were able to pick the property up for half of what it was financed for just a few years ago. Again, I was amazed at the kind of financing that was available for such a considerable purchase.
For this particular deal, we were able to obtain an SBA loan with …read more