Build Your Real Estate Fortune in Office Buildings
Most real estate investors I meet want to invest in residential properties. While such properties have built and are building thousands of real estate
fortunes, I suggest you also look at small office buildings as your potential source of real estate wealth. Why? Because:
- Office properties can be bought by you with better financing , than residential properties because there are fewer buyers for office buildings. Hence, sellers are more creative in the unique financing options they offer buyers—namely you.
- Office properties usually give owners fewer problems than residential properties. Why? Because office properties normally have only adult tenants. There are no children or pets to cause a
variety of nuisance complaints and woes.
- Office properties can have leases written such that the first $1,000 (or any other agreed-on amount) in repairs are the
responsibility of the tenant. This reduces the number of small-repair calls you get, allowing you to have a quiet life with your office-building real estate holding.
- Office properties may be the only type of real estate to invest in when you want to own real estate in an area where there are few residential properties. Hence, offices become "the only game in town." Yet they can be just as profitable and more hassle-free than residential properties.
How to Find Financing for Office Properties?
To find suitable financing for office properties, you must first have a property you want to buy. Take these three easy and quick steps to find suitable office properties:
1. Look around your area to see if there are office structures rented to businesses. In most urban (non-city) areas, such structures
will be one- or two-story buildings with a parking area in front or on one side and a tiny backyard for tenant services—trash removal, minor storage, or others.
2. Contact local real estate brokers, asking for listings of office properties in your area. Such listings will be sent to you free. Be sure each listing gives the Asking Price, Down Payment, Income, and Expenses. You must have these numbers.
3. "Work the numbers" for each property. You MUST have a Positive Cash Flow from each property! As a starting guide, look for at least $500 per month PCF for each office building you buy, depending on the size and location of the property. A larger monthly PCF is—of course—welcome and desirable.
To find financing for your office buildings,check with your lenders. Many of the lenders listed there lend on office buildings. And if you can get a bank as a tenant in your office building, ask the bank to finance the long-term mortgage. Many banks are willing to finance well-run office buildings.
Remember: Banks prefer to lend on real estate rather than to own it—except, perhaps, for their headquarters building. Knowing this, getting your long-term first-mortgage is easy!
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