commercial real estate

Commercial Real Estate

Commercial real estate investing means purchasing commercial property such as mobile home parks, hotels, apartments units, office buildings, retail properties, and even raw land. It contains higher degree of risk. It’s beneficial only, if you have perfect knowledge about this market. The overall success in this field is directly linked to your personal finance status.

Commercial real estate can be defined as “Any real property except a dwelling or property with only one to four dwelling units for residential use. The term ‘commercial real estate’ includes but is not limited to properties used or industrial, commercial, medical or educational purposes and properties used for residential purposes which have more than four residential dwelling units.”

Firstly, you have to decide that which type of commercial property is best for you. The next and the most important thing is the amount of money you plan to invest. After deciding all these things, you should make a decision about the location for your investment.

Commercial real estate has the strength to yield income now or in the future. Commercial real estate investing requires huge funding but not many investors can afford the finance from own resources. Thus, commercial real estate financing becomes basic necessity to meet up the requirement of much needed funds. One can construct, acquire or refinance commercial properties by availing commercial real estate financing.

Commercial real estate financing is secure, as the lender would take the title deed of the property in possession. The lender kept the title deed till the loan is fully paid. The other basic requirement is that the borrower should give a down payment, which is often 20 percent of the real estate value.

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Submitted by admin on Tue, 2006-12-05 07:03.

A Brief Guide To Commercial Lease

Commercial lease applies to business property. It is contracting between lessor and lessee in which lessor grants the ownership of property to lessee for business or commercial purpose, for a specified period of time.

A commercial lease is a written document that sets down conditions, rules and regulations between lessor and lessee. Lessee pays rent to lessor in turn, which is known as lease rent.

The commercial Lease can be short term or long-term. A short-term lease is generally for 1 year or less. Under short-term lease, the lessee pays fixed monthly rent to the lessor. On the other hand, the lessee’s that hold the property for a long period usually pay high monthly rent.

Commercial leasing offers various benefits to lessee and lessor. If business is suffering from financial constraints then leasing the property is a good decision. Capital assets may fluctuate in value, leasing shifts the risks to the lessor. Leasing provides more flexibility to business.

Rent paid for commercial use of property considered as expense and can be set off against revenue when calculating net profit at end of relevant accounting period. Depreciation of leased asset is considered as an expense and lessor can take the advantage of tax by deducting the amount of depreciation from revenue.

In few circumstances commercial lease proves harmful to lessee. When there is need to change the operations of the business, it may be difficult to terminate the lease before the end of term. If the value of the business is tied to the use of leased property then lessor may demand higher rental payments when lease come up for renewal.

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Submitted by admin on Tue, 2006-12-05 07:01.