Flipping Commercial Real Estate


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Commercial real estate (CRE) is that branch of real estate that is used solely for business purposes and monetary gain. This includes retail outlets, office buildings, business parks, hotels, and residential complexes. Financing these business ventures typically comes from commercial real estate loans. These loans are secured by liens on commercial, rather than residential, property.

Differences between residential and commercial loans:

Individuals vs. entities

Just as with residential loans, banks and individual lenders are actively involved in handing out loans for commercial purposes. While residential credits are most often given to individuals, commercial advances are given to business entities such as corporations, developers, and partnerships. These entities are often formed for the specific purpose of owning commercial real estate.

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You've probably heard of people investing in real estate and flipping houses, but that part never really appealed to you. You were more interested in larger properties and all the exciting possibilities there are in that realm. But can you really earn an income off commercial properties? The answer is yes. Read on to discover how.

Commercial property includes places like office buildings, shopping malls, apartment buildings, hotels, warehouses, and industrial buildings. Earning money off of the ownership of commercial real estate takes research and patience. This is not an investment you can make with a quick turnaround.

One of the key things to keep in mind is you will need to surround yourself with some experts. There are Certified Commercial Investment Members who have taken the time to get the training they need to be able to understand the market. You should also have a commercial real estate agent who is only working with you and is not playing both sides of the transaction. Your agent should also be working with a broker who is part of the National Association of Realtors.

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Home-themed TV shows make it sound easy: buy a house, update it, quickly resell it, and bank the profit. But look behind the scenes of flipping commercial real estate and you may discover that this simple process requires (some) money, careful budgeting, strategic planning, and a certain amount of luck and skill.

Flipping basics

Flipping commercial real estate means investing in a residential or commercial property, updating that property (somewhat), and selling it. You should aim to make a net profit of 10% - that is, selling it for a price 10% to 25% higher than the original purchase price, including all related expenses. Flip + Sell + Reinvest.

Where and how to start

The process of flipping a house can seem pretty basic but there are important steps to take at each point of that process:

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