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What Are the Main Differences Between Commercial Real Estate Loans and Residential Loans?

What Are the Main Differences Between Commercial Real Estate Loans and Residential Loans?
Investments can be tricky, and if you are looking into making more money in real estate, keep in mind that loans may appear the same, but they are not. Before venturing into commercial or residential real estate, there are a few things that you will need to consider, from different interest rates, loan terms, amortization periods, and penalties. Banks will also look into the types of income you have and if the real estate property generated revenue.    Interest Rates Commercial real estate or CRE and residential loans have different interest rates; CRE are considered at a higher risk, therefore, are required to pay more than residential loans. Commercial interest rates will go up or down depending on the standard index. On the other hand, residential interest loans usually have a fixed rate, depending on the term.   Additionally, the index for interest rates tied to CRE loans is typically different then residential loans, and do not have as much volatility in rate changes.   Down Payments Both residential and commercial loans will require a down payment. For residential loans, it can be as low as 3-5% of the loan. Commercial loans require more, with minimum down payments depending on the asset class typically starting at 25%, but many types of assets start at a minimum of 35% down.       Amortization Periods and Loan Terms Since the risks are higher for commercial real estate loans, their loan term is also made shorter. They typically have a “due in ten year” clause, wit......
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7 Common Code Violations that You Don't Want to Overlook

Maintaining your building can be difficult to say the least, here are 7 common items that are usually overlooked but can usually, be fixed in minutes. These tips may seem easy but they get overlooked often. 1) Missing & Broken Smoke Alarms and Carbon Monoxide Detectors - Every bedroom in the home is required to have a hard-wired smoke alarm in the room, and in the hallway outside of all sleeping areas.  Many municipalities also now require carbon monoxide detectors.  You not only need to make sure your smoke alarms are installed correctly, but also that they’re working properly.  One of the most common issues are dead batteries. New smoke and carbon monoxide detectors are tamper proof and come with a 10-year battery. 2) Hazardous Windows - Some homeowners look at windows as an added bonus, but fail to consider their condition, location, and type of glass. Your first order-of-business should be to replace windows near stairs and in bathrooms with tempered or safety-glazed glass. In fact, building codes require safety glass in new homes with windows that are near stairs and doorways, in showers, or pretty much any place where someone could slip and fall into the glass. Experts recommend that any single-pane windows be traded in for double-pane versions. Here are a few additional questions and tips to keep in mind. a) Do the frames have wind load labels?b) Is the glazing double or triple glazed to provide insulation and to resist impact? c) Are there visible fasteners to a......
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Should I Sell Or Should I Rent? That Is The Question!

Should I Sell Or Should I Rent? That Is The Question!
With the real estate market rising, it’s quickly becoming sellers’ season!  The recession is trickling away and housing markets are rising and homeowners are starting to grab their footing again. Hand in hand with the rising market comes the question “Should I sell my house or should I rent it out.” Well that depends! Even though the real estate market is in a general upswing, it still hasn’t recovered fully from the recession of 08. The job market on the other hand, even though on an upward slope, is still very limited, leaving homeowners struggling to pay their mortgage. That’s where leasing your property would come into play, but there are benefits to both options. Here are a few tips to help you decide if renting is for you. Create a comparative Market Analysis: Depending on where your property is located, there may be a high demand for rentals in that area. Check the rental prices in your area. Check to see how long the existing properties on the market have been vacant so that you can estimate the approximate time that your property could be vacant. It will take a significant investment of time and resources to do correctly, so it’s usually best to hire a real estate professional or property management company to create this analysis for you. Determine the expenses for the property: Calculate the monthly expenses for your property. How much is your mortgage? How much are you taxes for the property?  Do you want to offer insurance? &n......
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