Tips for tackling commercial real estate in Springfield, MO
In his New York Times best-selling book, "I Will Teach You To Be Rich," author Ramit Sethi writes, "On average, millionaires invest 20 percent of their household income each year. Their wealth isn't measured by the amount they make each year, but by how they've saved and invested over time."
One of the perennial investments that the rich make in is real estate. It's a smart way to build wealth that pays dividends for generations. However, if you don't know what you're doing, you could lose the proverbial shirt off your back. If you're thinking about investing in commercial real estate in Springfield, MO, following are three things to keep in mind.
Down Payment Required on Commercial Real Estate in Springfield, MO
Commercial real estate is commonly divided into the following six categories: Office buildings, retail/restaurant spaces, industrial (e.g. warehouses); multi-family dwellings; raw land; and miscellaneous (e.g. storage spaces).
Oftentimes, the down payment on a commercial property requires a hefty chunk of change. It could be anywhere from 20 percent to as high as 50 percent. If you're thinking, "Fifty percent! That seems very high," it is. Most down payments are in the 20 to 25 percent range of the final purchase price.
Situations where a 50 percent down payment is required vary. For example, if you have great credit and cash on hand to purchase a property, but no verifiable income, the lender will most likely require a larger down payment because they may assume that you'll be taking cash out of the property and/or don’t have cash on hand to handle any kind of financial hiccup that could occur.
Another instance that may require a larger down payment is the type of property you’re purchasing. An unoccupied retail may require a larger down payment than a multi-unit apartment building that already has tenants.
Zoning Restrictions on Real Estate for Sale
Some properties are not zoned for some type of businesses. For example, if your agent finds a building in an office park, but you want to rent space to retail stores and the office park is not zoned for this kind of use, it wouldn't be a fit.
Assembling a Team of Experts
Every commercial real estate investor should have a team in place. Below we’ll highlight the professionals you want to have on your team.
An Agent: One who specializes in commercial real estate. Specifically, one who specializes in real estate where you live. If you live in Springfield, you want an agent who specializes in commercial real estate in Springfield, MO.
An Inspector: Here again, choose one who has experience with commercial properties. Inspections can range from a simple visual examination, to a detailed, hands-on inspection of all the building's electrical, mechanical, plumbing and HVAC systems. As inspections differ, ask the inspector you’re thinking of hiring exactly what they check.
A Loan Officer: This person will help you get the best loan for your investment.
An Attorney: To peruse all contracts before signing.
With the help of these professionals, you’ll be better able to tackle commercial real estate in Springfield, MO. They’ll help you find the right property, ensure that it's a sound investment, secure financing for it, and confirm that all legalities are met before any contracts are signed.
Investing in commercial real estate in Springfield, MO can be a daunting task. However, with help from the expert team at Southwest Missouri Realty, you’ll be on the path to a secure financial future.
Please contact us if you have any questions or comments.