How likely is it for me to win a lawsuit where a seller wants to back out of a signed commercial real estate offer/contract?
Obligatory legalese: I’m not a lawyer and you should consult one for legal advice.Generally speaking, if you have performed as specified in the contract, including putting in deposit, removing any applicable contingencies, and informing seller of your intent to close, then I think you have a pretty good case.However, in practical terms, it’s not clear if you should go to court. Lawyers are expensive and, depending on the contract and the state you’re in, you may not be able to get back your expenses, even if you win. And any case, even a winning one, is going to take a long time to complete, is it really worth your time and aggravation?
What is commercial real estate?
Drawbacks in commercial Real estate investmentCommercial properties can beRetail buildingOffice buildingWarehousesIndustrial buildingApartment buildingMixed use building wherein it can be used for all the purposes like retail, offices and apartments.When the income potential is more, there are more risks as well. Commercial properties have the advantages likeIncome potential When you are using the commercial property for business, you get many customers buying your products. They generally return 6% to 12% of the sales they make, depending on the area, which has a higher range.Professional Relationships Small business people take pride in their business and to maintain their standard of living. However, in case of commercial properties, the owners may not be individuals, but operate their business as an LLC. The relationship between landlord and tenant is business-to-business customer relationships which keeps their interactions professional and courteous.Limited hours of operations Businesses normally wind up during the night except for the emergency calls for break-ins or fire alarms. In commercial properties, if any such thing happens at night, your alarm company will notify the concerned authorities.More objective price evaluations Commercial property prices are easier to evaluate as you can request for current owner’s income statement and fix the price accordingly. If your broker is a knowledgeable person, he or she will fix the price, taking the area’s cap rate into consideration.
How does commercial real estate differ from residential real estate?
There are many definitions base on different realms.Legal. Different state has different definition between Residential and Commercial. In New York, any (besides Condo and Co-op) dwellings that are more than 4 units are considered Commercial. The legal definition is use to govern taxes, licensing law, zoning, etc.Brokerage/Investment. In the Brokerage or Investment world, it means Property Type:Residential 1 - 4 Family, Condo, Co-opCommercial Multi-Family (5 and up) Office Industrial Retail Shopping Center Land Hotel Etc.In this realm, it usually means separation of duties, Residential brokers/agents do Residential sales/rental, Commercial brokers/agents do Commercial sales/leasing.It has NOTHING to do with:Own-Use or Investment. Someone can buy a 3-Family property for his own use because one family for self, one for brother, and one for parents. Or conversely, someone can buy a Single Family (1-Family) property for investment, renting it out to collect rent. Buying a bunch of 1-Family for investment purpose doesn't make you a "Commercial Investor". Conversely, buying a retail building for you own use (because you want to house your own business in it) doesn't make you a non-commercial buyer, in the eyes of the law and broker, you are buying a Commercial property.
Is it more profitable to buy commercial real estate to rent out or is residential real estate a better option?
The rental yields on commercial real estate is generally higher than the rental yield on residential real estate.But in either case, the rent will not cover the EMI on the loans taken, even if you take only 80% of the value of the property as Loan.However, your yield is a combination of current value of the(a) future rentplus(b) appreciation of the propertyLess(d) Interest and other expenses incurred on the property.The current value of tax benefits should also be factored, to find the actual profit from the transaction. At this stage, it could be either or both or neither the Commercial Real Estate nor the Residential real Estate that can be profitable, depending on the entry and exit level, holding period etc.
I heard a lot of young people are making great money in commercial real estate. How does one make money in commercial real estate?
As a commercial real estate broker who focuses on investment properties I have seen people earn millions in profits. Here are a few examples on how they did it:They bought a half vacant retail building filled with low paying month to month tenants. They evicted the tenants and improved the building cosmetically. The hired a professional retail leasing team and filled the property up with better paying market rent tenants and sold the building at a profit.They bought a self storage facility at 50% occupancy. They fired the manager and hired a new one. They rebranded the property. Added a new website. Fixed a bunch of broken units and raised rents on existing customers. They then sold the property at a huge profit.They bought an apartment complex with problem tenants. They evicted the drug dealers and trouble makers and invested a few thousand per unit in kitchen and bathroom upgrades. They then raised rents and lured better residents. They then refinanced when cashflow improved and pulled nearly all of their invested capital out of the property. Now they have none of their money left in the property but still own the asset. The best of both worlds - plus their equity proceeds are not taxable- bonus!They bought a mobile home park. They evicted problem tenants and brought in new homes to fill up vacant lots and lured new residents to buy these homes which increased the income on the property. They added fences and flowers and raised lot rents on existing residents.They bought a large vacant boarded up building downtown. They hired an architect and redesigned the property into a low income housing property and used state and federal tax credits to assist in funding the project’s redevelopment. Upon stabilization they refinanced with non recourse debt and owned a “new” multifamily property without having any of their own money into it.They bought a old industrial warehouse full of multilevel racking systems and other “junk”. They offered 20 cents on tha dollar for the property which was surprisingly accepted. They then dismantled the racking system and sold the scraps for significant money. They also found thousands of dollars in value in the parts of the “junk” sitting around the property. After tallying this up they received more money in selling the scraps than what they paid for the Building (I.e. free Building!!). Money was then invested back into the building and a tenant was secured. Significant value (equity) was created using nothing but creativity and effort.This is not complicated stuff. They just saw the opportunity and took advantage of it. Some used investors and some used their own money. All used lenders for the acquisition and/or disposition strategy.Finally I got paid a commission for selling them these Buildings or for selling the Building after they improved it. Sometimes I even got to do both!Commercial Real Estate is a great business. You get to meet a diverse mix of people and see them create wealth from taking risks and working hard.
How can I find commercial real estate and what kind of commercial real estate is available?
To find commercial real estate for purchasing, you can hire any of the reliable broker team that would suggest you best profitable commercial real estate.One such team I know is business broker Minneapolis. They are the most reliable team of experienced brokers from the US. They would help you to get a best commercial real estate according to your choice.They have professionally trained and licensed agents that will work on behalf of you. They provide a complete range of services which include selling, buying and leasing commercial real estates.They assist the sale/purchase of commercial real estates like retail, office and industrial properties through their extensive professional network.You can check out the listings of their whole work and also talk to their most certified and valuation business experts from the link provided above.
Commercial Real Estate: How is honestbuildings.com going to monetize?
Hey Bruce - We're certainly working hard so no one ever says 'I'm not sure what they do'. But that said, in a nutshell Honest Buildings connects people to information and business opportunities for buildings across the country. More than people talking about buildings, service professionals from architects to real estate brokers can showcase the buildings they've worked on and represent. Owners and managers can also highlight their buildings and how the differ from competition, while connecting with the best service providers for their next project or transaction. This network makes the process of finding information about buildings, and finding the right people to get work done on buildings, exponentially more efficient. We make money by offering premium memberships to professionals who want to receive request for proposals for open projects from building owners, managers and even tenants. Many different stakeholders also advertise to targeted audiences on the platform.JoshChief Marketing OfficerHonestBuildings.com
What will it cost a buyer to get out of a real estate contract?
Get advice from a lawyer.There are consumer laws that give time to change your mind, however, there is much of the process that don't. The first thing you will owe directly andor indirectly will be the ENORMOUS commission of the marketing & advertising agent for real estate, aka. “the real estate agent”. This list could go on and on… get advice from a lawyer.Best of luck.