Buying your first home is a life-changing event. A 2020 research study by the National Association of Realtors (NAR) showed that people have a longing to own a piece of property that they can call their own. That longing was the number one reason home buyers made the leap. And that longing is matched by the numbers. In 2020, the NAR reported that 20% more people had purchased a home than the previous year. The trend continued into 2021 with a 6.12% increase according to Statista.
The same can be said for commercial real estate, which slumped hard during the COVID-19 pandemic where the NAR reported that as many as 59% of surveyed respondents reported an increase in missed or late payments in the fourth quarter of 2020. That has since turned around. CBRE’s 2021 research reported a surge in investment by almost 83% – about $775 billion. 2021s fourth quarter was up 82% from 2020s Q4 with a volume of $301 billion; an increase fueled for the most part by a 116% growth in multifamily investment volume. Commercial real estate is booming, and according to Mashvisor, one can expect returns to come in at an average of about 9.5%.
According to Yahoo, the real estate market thrives thanks to low-interest rates and better economic stability. These conditions make it easier for people to invest and purchase more property which hikes demand and prices. The first interesting fact is about commercial real estate loans. Commercial real estate lenders give these to business entities with the typical requirement that they occupy at least 51% of the building.
The second is that commercial real estate lenders secure their loan with a lien against the commercial property, unlike residential mortgages. A lien is a legal claim against a property. The last interesting fact about real estate loans is that commercial real estate loans are usually 0.5% to 1% more than the national 30-year prime mortgage rate. Their rates can range from 3 to 20%. Application for a commercial real estate loan also requires extensive documentation, e.g., debts, income, assets, credit profile, and more. If you need advice regarding commercial real estate, reach out to West Coast Capital LLC to learn more.