Buying Real Estate for Profit

Commercial Real Estate Still Optimistic

Here is an article on commercial real estate that makes many relevant points.

Commercial Real Estate Optimistic Despite Housing Slump
By M. Siddique

The commercial real estate outlook is cautious but decidedly upbeat despite recent busts in the housing market, says a recent article by the Associated Press.

Commercial property sales hit $401 billion through the end of October due to strong growth in the office and retail segments. This topped last year's $359 billion total, according to Real Capital Analytics, a real-estate research firm based in New York.

According to the Commerce Department Construction last month, spending on office buildings, shopping centers, and other private, nonresidential projects leaped 15.2 percent in August.

Though analysts say there are some signs of slowing growth, it is nothing compared to the residential real estate market plagued by foreclosures and mortgage defaults mainly due to risky subprime mortgages.

The commercial market has not seen the problems the residential mortgage mess has caused, mostly due to the fact that buyers and sellers are more refined, have more financial flexibility, and have the resources to endure the credit-market mayhem.  However, that doesn't imply the market would go unaffected if economic growth stalls.

"As home prices continue to fall, people feel poor and spend less and that puts pressure on the profits that fuel corporate spending," says William Wheaton, research director at MIT's Center for Real Estate.  Wheaton asserts that there is a 50% risk of a mild recession in the U.S. within the next six months.

Data rates due to be released soon will most likely show that September was one of the slowest months in several years for each area of commercial real estate.

However, if the broader economy falters, the commercial real estate market will be susceptible to what Wheaton calls "credit-risk contagion".

The credit crunch has already caused some sellers to ask for more upfront capital when mortgage-backed financing is used.  However, the markets in New York, Washington, and San Francisco have remained notably stable, according to Real Capital Analytics.

Siddique is real estate investor for over 22 years and President of ButterFlyLister. This article first appeared on http://www.butterflylister.com - a leading real estate website with a comprehensive property listings with owner financing and lease to purchase options. Now Sellers can sell their homes at full price in any market. Launched in 2007, ButterFlyLister now offers Home Listing service throughout the united States for buyers and sellers. ButterFlyLister attracts thousands of buyers, sellers and real estate investors a month. Download Free How to sell your Home for Full Price in any market.

Buying Rental Properties As An Investment When Prices Are Down

While real estate prices are down, rents have steadily increased across the country. This makes sense because people who are waiting to buy real estate until the prices go down further will continue to need someplace to live.

If you are an investor, this is the time to purchase properties that make good rentals. What kinds of properties make the best rentals? Here are some things to look for when considering a property as a rental investment:

• Is it close to transportation? This is crucial when you are renting out a property. People need and want to be close to bus lines, railway stations, and other types of mass transit. Look for properties that are within a block or so of mass transportation.
• Are there two bathrooms? Homes with only one bathroom are never desirable, but when they are rentals it becomes even more important to have that second bathroom. A buyer will always feel like they can add one on later, whereas a tenant will want it immediately.
• Is it in a quiet location? No one wants to be in a property that is on a main street, adjacent to a school or next to commercial property. Look for properties that are located on quiet streets and away from the busy, noisy areas.
• Are there an abundance of tenants in the area? You may have to check with a realtor to find out exactly what the statistics are, but you can do your own investigation by looking in the local papers and on the internet. This will also give you an idea of the rental rates so that you can arrange financing that will be in your favor.

Rental properties can make you wealthy as an investor, but you must do your homework first.