There are key differences in residential and commercial direct real estate investments. On one hand, residential real estate is usually less expensive and smaller than commercial real estate, and so it is more affordable for the small investor. Many thrifty small investors of modest means have increased their and their family’s fortunes by buying rental property over decades.
On the other hand, commercial real estate is often more valuable per square foot, and its leases are longer than for residential rental properties. With greater revenue comes greater responsibility, however; commercial rental real estate is more heavily regulated than residential real estate, and these regulations can be different not only from country to country and state by state, but also different in each county and city. Even within cities, zoning regulations add a layer of unwanted complexity to commercial real estate investments.
There is also increased risk of tenant turnover in commercial rental agreements. If the lessee’s business model is bad, their product is unattractive, or they are simply poor managers, bankruptcy can leave expensive real estate from generating revenue unexpectedly. Moreover, just as land can appreciate in value, it can also depreciate. A formerly hot retail locations have been known to decay into rotten shopping centers and dead malls.
Real estate is a special instance of real property, which real estate is including land and buildings with the rights of use and enjoyment that come with the land and its improvements.
Get The Most Out Of The Credit Score
You can get a decent mortgage rate with a decent credit score but you can get a great mortgage rate with a great credit score. Studies show that people with the best credit scores—roughly 720 and above—can get a mortgage rate three-quarters of a point lower than those with scores in the mid-600. To hit the sweet spot with your credit score, keep your loan balances low.
Homebuyers, especially first-time homebuyers, are apt to take the first mortgage deal they can get (probably because they found their “dream house” and don’t want to wait to find a better deal). However, shopping around can make all the difference in the world. If you know where to look, by typing in a zip code you can come up with about half a dozen lenders in an area that offered interest rates at or below the 5.19% levels.
Look At Favorable Rates
You only have about 48 hours to find a good mortgage rate, contract the lender and lock in that rate. The lender will “pre-qualify” you, meaning they’ll rubber-stamp an interest rate approval, but won’t lend you the money until you’ve been more thoroughly vetted or pre-approved. Make sure you lock in your interest rate on paper. Have a talk and demand that of the lender.
Ask that the rate is good for a fixed time period, say 30 to 60 days. That will give you enough time to find a great house. Better yet, ask your lender for a “float down” agreement, meaning that if your locked-in rate falls during that 30 or 60 days, you’ll get the lower rate.