In the United States, commercial property values are on the upswing. Since they started recovering from the problems in the real estate market in 2009, they have increased by at least 42%, according to the Moodyandrsquo;s/REAL Commercial Property Price Indices. If you have commercial real estate notes for sale, there are some things you can do to make the process easier.
Get your documents together.
When you have commercial real estate notes for sale, you need to have certain documents together. Make sure you have everything you need before you look to sell. Both the buyer and the seller of the commercial real estate notes need to have their documents. These often include the letter of intent to make the purchase, purchase contracts, sale agreements and others. There are multiple kinds of real estate notes and all of the sales are different. If you have a home mortgage note for sale the process is going to be different from the process for commercial real estate notes for sale.
What is a real estate note anyway?
A note is created every time any kinds of real estate is sold. These are created to document the sale and to give the buyer certain rights. The type of property that is being sold will determine the kind of note that is created. Commercial real estate companies will have to deal with different kinds of real estate notes than a residential real estate company, which deal in mortgage notes. If raw land is being sold, a land contract is created.
Why would someone want to sell one?
People sell their real estate notes for a number of reasons. The most common reason people sell their real estate notes is that they need cash. Anyone who has a real estate note can sell all of it or part of it. Investors in real estate often sell all or part of their notes to get funds to buy more properties. Individual sellers often opt to sell carry back notes that are then released from the property. They can then get the cash from the sale. Different people have different reasons but it often comes down to the reason they bought the property in the first place.
What about real estate stock?
A common practice among real estate investors is to use real estate notes when making purchases of real estate stock. Investors look to find partners when they are considering making investments in bigger real estate properties. This is especially true for commercial real estate notes for sale or for other large properties like farms and ranches. This is also a common practice for the sale of undeveloped land. What happens is they buy stock and then put the funds into a real estate trust (REIT). An REIT is a company that manages and owns a number of different investment properties.
Be careful when you have commercial real estate notes for sale or are looking to buy one.
The sale of commercial real estate notes can bring you a lot of cash quickly but there is a risk. Cash flow notes are never paid for a their full value. The seller may be forced to pay the fees to transfer the title and for a real estate appraisal. When selling commercial real estate notes, a seller can be expected to take home only between 50 to 75% of the property’s actual value.
Buying a commercial real estate note can also carry some risk. It is imperative to know the ins and outs of commercial real estate. That includes business management, tenant rights, federal and state real estate laws, finance options, etc. Buying and selling commercial real estate is a lot different from selling and buying residential real estate the same way that renting a storefront is different from renting an apartment.
Do your research.
The very good news about having commercial real estate notes for sale today rather than in decades past is that there is a lot of information about the process online that was never available as easily before as it is now. It is easier than ever to research and find all of the information and help you will need with your commercial real estate notesl.