Florida residents who are interested in starting a business may be concerned about securing an ideal commercial location. Getting financing is an important part of obtaining commercial real estate. Prospective business owners should understand where they should go for commercial real estate loans and what to do to improve their chances of getting approved for one.
For Florida investors in commercial properties, 2017 was generally a good year. However, 2018 may not be so rosy according to a report by the Mortgage Bankers Association. Slower growth with net operating income and increased interest rates are among the factors cited for the group's conclusions. Solid income returns on real estate-related commercial investments are still expected, just not as much as what has been seen in recent years. Researchers also don't think property values will increase at the same pace.
Some people in Florida who have invested in the historically strong commercial real estate market may be concerned about reports indicating a potential downturn. In 2016, returns came in below the 20-year average for the first time since the financial crisis of 2008. However, those returns have hit double digits consistently throughout the past two decades, with an average of 10.1 percent.
Florida residents who are interested in commercial real estate should be aware that purchasing and managing investment properties properly requires significant effort. The challenges can lead to certain mistakes, which investors should make every effort to avoid.
Rising rents and low vacancy levels may position the commercial real estate sector to provide stable returns to investors in Florida and around the country according to NAI Global. The real estate brokerage firm mentioned that demand was strong in the second quarter and could remain strong for the rest of 2017. The net absorption rate nationally in the industrial sector rose to 71.8 million square feet while rents rose 1.6 percent in the second quarter.
Thorough due diligence is crucial for commercial real estate buyers in Florida who wish to avoid costly mistakes, and taking care of the issues raised by these inquiries early in the transaction process can save both time and money. A due diligence period gives buyers the time they need to inspect properties and check out the claims made by sellers, and purchasers may back out of deals or negotiate more attractive terms when their efforts reveal building defects or uncover irregularities in financial documents.
Many Florida residents may invest in real estate by buying a second home. This is because they are familiar with the process of buying property and understand how it can appreciate in value over time. However, an individual may underestimate the challenge and risk in owning a single-family home for investment purposes. In many cases, it may be easier and more effective to passively invest in commercial real estate.
Florida investors are likely aware that August is normally the slowest month for commercial real estate leases and sales. However, August of this year is different as is the summer so far as a whole. Commercial real estate has seen a strong uptick in business with more activity around the country than during the spring and winter as well as the summer months of prior years.
Commercial real estate in Florida sometimes offers investors good returns. However, lenders have raised their standards for financing property purchases. A report issued by the Federal Reserve System shared the results from a survey of loan officers, who have placed stricter qualifications on business property mortgages. The survey collected responses from officers at 98 banks operating in the United States.
A Florida resident who wants to borrow money for a commercial real estate project may believe that getting loan approval is a formality. However, the lender may not necessarily see it that way. If a person has tax issues, late payments or other credit blemishes, it may not be possible to approve a loan application. The only way to overcome these issues may be to have another person or entity guarantee the loan.