First you might say it is a bad market to buy any real estate. Yes, market conditions are difficult. I, myself don’t look too much at the market conditions which are very difficult to predict, but rather look at the actual DEAL. If the real estate deal makes sense than I buy. What deals make sense? If you get good cash flow then it is a good investment.
Wikipedia: The Small Business Administration (SBA) 504 loan program was created to help small to mid-sized business owners acquire commercial property without the financial hassles. While this program is less-used and very little understood, in order to qualify, over half (51%) of the property must be occupied by the borrowers within one year of ownership. Another option is forming a holding company from two operating companies. This company can then take the title to the commercial property. To qualify for this program, U.S. citizens or permanent residents must hold a majority of the ownership of the operating companies and the holding company. The 504 Loan does not contain any restrictions or ceilings; however, there are three criteria for eligibility:
- The company’s average net income cannot surpass $2.5 million.
- The anticipated project size must be greater than the personal, non-retirement, unencumbered liquid assets of the guarantors/principals.
- Net worth of the operating companies must be $7 million or less.
SBA loans are really great. You need just 10% downpayment comparing to 25-35% for conventional commercial loans.