Commercial VS Privately Owned Real Estate: What You Need to Know
Looking to invest in real estate? There are two basic umbrella terms used to describe real estate, commercial and private. Both come with different terms and benefits for those interested.
Privately Owned Real Estate
In 2015, the primary reason for purchasing a home was the desire to own a home of their own. But as we all know, it is not a cheap feat. In March 2016, the average home selling price in the United States was $186,000, and that came with an average home loan mortgage debt per family of $9,855,269. The majority of these buyers purchased their home through a real estate agent or broker, and only eight percent of home sales were for sale by owner sales, the lowest rate recorded since 1981.
If a homeowner has trouble paying their mortgage, they have the option to refinance once they own equity in their home. Equity is the difference between the amount owed to the mortgage company and the worth of the home. This may not always give an immediate reprieve because to be approved, most banks and lenders will require borrowers to maintain their original mortgage for at least a year before refinancing. Across the board, this process can be extremely profitable, seeing that throughout the entire United States, the total amount of home equity cashed out from refinanced loans in 2015 was $12.2 billion, with the average length of the loan being 6.4 years.
Commercial Real Estate
Investing in commercial real estate is a fantastic way to gain extra income. Defined as any nonresidential property used for commercial profit-making purposes, commercial real estate includes shopping malls, office buildings, and industrial parks. Proven as a successful investment, funding of real estate technology startups reached $605 million in 2014, up from $241 million from 2013.
When owning real estate, it is also imperative to make use of tenant representation, which is a real estate agent who represents tenants when it comes to negotiating space for lease. If this process is not done properly, you may have to follow the procedure of dealing with a reo property.
There are many businesses available for hire when it comes to reo properties. Commonly owned as foreclosures, these are properties owned by the bank. When this happens, receivership services are available as court appointed parties used to manage property during these disputes. Their duties include takeover services, post takeover services, reporting, and attending court.
Interested? Check out the Chicago commercial real estate near you!