A problematic financial climate for residential real estate has increasingly inspired investors to consider investment in commercial property and business opportunity situations. This article will offer some background about possible advantages of purchasing commercial property or buying a business plus an overview of primary commercial mortgage financing and business loan options.
As many investment experts will tell you, there are several compelling reasons to consider business finance and business opportunity investing. A primary incentive to explore business financing options is the ability to finance a business loan or commercial mortgage with income generated by either the business or the commercial real estate investment property. Another key investing attraction is the ability to either include or exclude commercial real estate from the commercial loan process.
The recent negative investment climate for residential real estate investment property has provided investors with new reasons to explore investing in business opportunity and business finance options. We will offer some candid advice about commercial mortgage and business financing as well as an overview about the importance of evaluating business and commercial investment property purchase possibilities.
Business Finance - Investing in Unique Businesses and Special Purpose Properties
Commercial real estate and business opportunity choices include special purpose situations such as funeral homes and golf courses. The unique characteristics of such business investment options translate to enhanced possibilities to differentiate a commercial business and provide added value.
Of course specialized business real estate investing does require special purpose business finance solutions such as golf course financing and funeral home financing. A critical requirement for business investment success is the ability to acquire a business loan that is appropriate for both the business and business owner.
Buy a Business with an SBA Loan for a Commercial Mortgage and Business Opportunity Finance
The option to use SBA financing (Small Business Administration loan) provides a business loan choice not available for residential real estate investing. This form of business financing is available to new business owners and can prove to be instrumental in purchasing a business opportunity or commercial real estate investment.
Business Opportunity Financing Without Real Estate Investment Property
Purchasing a business opportunity does not involve commercial real estate. The lack of a commercial mortgage can be an advantage if real estate values are decreasing because business value is dictated primarily by the business income rather than the real estate.
Business Loan - Commercial Investment Value Driven Primarily by Income
In comparison to residential real estate investment property value depending primarily on location, commercial real estate and business value is primarily determined by business income. This results in less sensitivity to local real estate property value trends. A business loan will require an appraisal evaluating business income, usually over several years.
Commercial Loan Precautions - Business Financing Problems to Avoid
Just as there are unique and substantial positive benefits associated with buying a business or commercial real estate investment property, there are also a number of special business loan and commercial mortgage problems to avoid when arranging business financing. It is especially relevant for residential real estate investors to realize that there are more than 20 key differences between residential and commercial investment finance options. There is a critical commercial loan difficulty to anticipate with each difference.
Failure to Communicate Within a Small Business
A failure to communicate can create havoc in several critical areas for small businesses. Three potential solutions include business training, negotiating and writing. Ironically these functions are also among the most likely to be severely impacted by a failure to use business communications strategies effectively in the first place.
Communication Strategies for Small Businesses
When individuals and businesses talk about communication, there can be many possibilities as to what they are including in the topic. While cell phones and tablet computers might be relevant to small business owners, the more actionable areas of interest are likely to include business proposals, negotiating and teamwork. Writing seems to have fallen into neutral territory as a strategy for communicating, and along with that the use of business proposal writing has also declined within many small businesses. Until companies discover more effective business development strategies, writing business proposals should be looked at closely.
Finance and Business Mistakes
Business and finance mistakes can be costly and cause other serious complications. While it can be helpful to learn from mistakes, it is also preferable to avoid such situations whenever possible.
