When I tell people that I list and sell Commercial properties, most people understand what that means. But, there are some who look at me and ask, what exactly do you mean by that? To that, I say, good question.
Lenders and appraisers define “commercial” property as any building which consists of more than four units, zoned for commercial use. Let’s break it down some more. Stores are commercial property. Office buildings are commercial property. Warehouses and storage buildings are commercial real estate.
Commercial type properties are not typically used for residences, however, there are stunning exceptions. Their main purpose is to be used for business and to create an income stream for the building’s owners. Therefore, when one initiates the purchase of a commercial property, the process is different from purchasing a single-family home.
When purchasing a home, the larger share of qualifying for a loan is the financial status of the borrower. Credit history, the ability to carry the mortgage, taxes, insurance, and other debt are examined. Then an appraisal will determine the value of that home.
The process of purchasing commercial real estate is reversed. First and foremost it is the ability of the property to generate sufficient income to carry the mortgage and other expenses which is of primary importance. The financial status of the borrower, while still a factor, is not the first thing a lender will be looking at.
This is obviously a very simplistic version of what a commercial real estate is, there is much more to it. From hotels to bars, to airports and even raw land that is zoned for commercial use. I have been in Real Estate for a number of years, and I have owned both commercial and residential properties. I understand the logistics of buying, selling and owning both types of properties.
I am here to help when you need it.
Alan J. Chane
SPECIAL ANNOUNCEMENT FOR COMMERCIAL INVESTORS:
The Chane Sells team currently has listed a choice piece of property that is situated within the Florida Qualified Opportunity Zone.
To learn more about the potential tax advantages
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