We all know the real estate market has been hot all across the country. As a top producer on one of the best real estate teams in Philadelphia, I’ve been taking note of increased interest in investment real estate. People want to invest – sometimes for the first time – and there’s a lot to know in the commercial space that is different from the residential market. Below I share four insights I am seeing in the industry today and why you might want to consider investing in multi-units.
- Philadelphia is ripe for investment and has ranked in the top 25 cities for the number of multi-family units being added to the market.
- Both residential and commercial sales are selling now faster and at a higher price but due to lower rates, the monthly payment still may work in your favor compared to a lower price but higher mortgage rate.
- Commercial and multi-unit properties may take longer to sell compared to residential properties, but the listings that are priced right, with medium to high cap rates, are still flying off the market. Understanding exactly what you are looking for in a property, can determine how fast you are going to act. Keep in mind closing time on a financed commercial deal may take longer – and sometimes months.
- Philadelphia as a city was relatively stable in terms of the rental market through the Pandemic. Now, with less homes for sale on the market and fewer people able to buy, rent rates are on the rise.
Things to Consider as a First Time Multi-Unit / Commercial Investor
When you buy an investment property, it becomes more about the numbers than an emotional purchase and whether or not those numbers add up to a smart deal. It’s a good idea to assess what’s important to you as a buyer including having a sense for the length of the investment you are willing to make. You’ll need to educate yourself on the rent roll, the profit and loss statement, and locations that qualify for the new tax abatement program if that’s something you’re interested in. You’ll also need to factor in a larger down payment – at least 25% down on a commercial investment property instead of the typical 5% for a conventional residential loan. A strong commercial agent should be able to help walk you through this entire process and connect you with the lenders who are willing to approve loans for a multi-unit or commercial investment.
Want to know more about multi-unit investing? If you’re reading this after September 14, 2021, reach out to Sabina for a copy of a free class and a recent panel discussion she was featured in.
About Sabina Palermo: Sabina Palermo is a top producing agent on the PhillyLiving team at KW Philly. Sixty percent of her business comes from investment properties. She grew up in the Republic of Moldova, Eastern Europe, and is fluent in both Romanian and Russian. Sabina can be contacted at [email protected] or 215-821-5527.