The value of commercial real estate is driven by numbers. There’s little or no emotion in it.
The closest thing to an emotional buyer would be an owner/user who becomes attached to a property as a homeowner would. Other than that, value is driven by rents, and of course location.
Many people start their real estate investing with multi-family properties, which makes perfect sense on many levels. An important consideration when buying is how your investment will be managed. Will you do it yourself to save money, or hire a professional to collect rents and field maintenance and complaint calls 24/7?
What separates residential property value from commercial is the economic performance. Residential has none, and commercial has nothing but. As investments, residential property is pretty lousy – no offense to readers who are homeowners – I am one too. But, look at your home purchase and its ROI (return on investment) after 10 years.
In 2005, the Maine Real Estate Commission introduced “buyer agency”, a way for buyers to be professionally represented with an exclusive buyer agency agreement. This service is free and levels the playing field between buyer and seller in the process of buying real estate. The seller pays a “co-broke” fee to the buyer’s agent, and for that fee, the buyer agent is duty-bound (with a signed buyer agreement) to keep all information confidential, explain contracts, disclosures, review buying options, and pitfalls and advocate for the buyer’s best interests.
As the baby boomers gather into retirement, a significant portion doesn’t have savings to carry them through their elder years. Many will rely on investments that provide a safe but paltry income of 3-5%, or a risky but enticing income of 10-15%. The bottom line is: to get a decent return on your investment, you sacrifice safety. There is a very attractive alternative: the multi-family investment.
Maine has one of the oldest housing stocks in the country, and this poses special problems for owners of older homes, where taking advantage of cutting edge technology is far more difficult than buying or building a home with the technology embedded. As the chasm widens between cost-effective energy-efficient homes and budget-busting older homes, there may be an approaching tipping point that will push the green revolution into hyper-drive.