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Foreclosures Rising In Commercial Real Estate Market - Articles Surfing

Today's economy has been difficult on many. People are losing their homes in large part due to the interest only loans that banks were praising just a short time ago. What many don't realize is that homes are not the only properties being lost to the struggling economy; commercial properties are also being lost and these are prime opportunities for investment. Savvy investors can often pick up these properties for big discounts and resell them for immediate profits.

Costs are going up. For the owners of commercial properties, those costs are affecting every aspect of their business. Insurance costs are high, material for repairs to properties is costly, and hiring others to do necessary maintenance is expensive. All of these are factors that can lead to an owner of a commercial property losing that property to the bank. Taxes are another factor. Taxes increase often and the commercial properties in an area are often asked to pay a large portion of that tax increase. This can also lead to an owner falling behind in their payments and not being able to catch up; this results in the property being listed for foreclosure. For some, it is the only way to pay their debts and be able to start all over again.

The struggling economy is playing a large part in this struggle for commercial properties. This means that until the economy improves which looks pretty unlikely at least in the next two years or so this string of foreclosures will not improve. The amount of people losing their properties to rising costs may actually increase until the economy turns around.

Little known small businesses will likely be the first to go. If the name of the company has not been well established and their product is not well appreciated, they may not last very long. A small business that deals in a product or service that is required by many will probably have better luck. However, these businesses will still be vulnerable due to the fact that they will not be dealing with large profits. Their profit margin is smaller and depends entirely on their client base. If their clients stop coming to them for any number of reasons it won't take long for them to lose their footing and eventually their property.

Mid-sized businesses will be next. These business which are larger and deal with profits on a larger scale will be able to last a bit longer. They may not be wholly dependent upon their client base. Their profit margin may be large enough to sustain them for a while even if they lose clients. Yet, they will not be able to sustain this for large period of time. If they cannot raise their client base back through promotion or discounted goods or services, they will eventually lose their footing as well. They will not do so as quickly as a small business with a small client base, but they will lose their property too.

It will take much longer for larger businesses with a reputation in the community and large profits to lose their property to economic issues. They will have the loyalty of their clients or customers even while raising their prices to an extent. They will be able to maintain their business for quite some time even while losing economically. However, these properties too can be lost to poor accounting methods or tax related issues. It doesn't happen as often, yet it does happen and an investor would be able to jump on this opportunity and invest in the property for resale or as a rental or lease. The investor would see a large return on their investment quickly.

Many commercial property owners will try to save their properties by filing bankruptcy. For some this will work and for others it will buy them additional time but they'll end up losing the property anyway. When something like an airline files for bankruptcy protection they are protecting what their planes and properties, yet they have to make drastic cutbacks in order to pay their debts and turn their situation around. This is the same thing with commercial property owners. Many will file for bankruptcy and make drastic cuts and save their property. Others will not have cuts big enough to make and therefore will not be able to save the property. This is when their properties will fall into foreclosure and be available to investors.

Some property owners will choose to sell their properties rather than ruin their credit through the bankruptcy and foreclosure process. Since they will need to sell rather quickly, they will often offer the property below the actual value. As an investor this is another great opportunity to buy the property and resell it at its actual value. This will afford you a nice profit with very little investment.

Many investors don't know where to find information about commercial properties that are in foreclosure. Many believe that this is information that you have to pay a service for. This cannot be further from the truth. Any time a property is in foreclosure that information is freely available through the county building of the county in which they reside. They will go to auction just like the residential properties that are in the county. As an investor it's wise to research this monthly and go to the auction to pick up the property; often at a much discounted rate.

Many investors lose out of these opportunities because they don't know how to find these properties. If you are vigilant and pour over the properties for sale, you will be able to find them and bid them correctly at auction. This will result in you maximizing your profits. Your investments will bring you large returns through the efforts of doing a little homework and finding these little known investment opportunities.

Submitted by:

Tony Seruga, Yolanda Seruga And Yolanda Bishop

Tony Seruga, Yolanda Seruga and Yolanda Bishop of http://www.maverickrei.com specialize in commercial and investment real estate. As of May, 2006, they and their partners are managing over $600 million dollars worth of new projects.


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