When people decide to become landlords, they usually think of renting out a residential property, such as a single family home or a condo. While a lot of investment properties are made up of these types of rentals, the smartest real estate investors know that they can make bigger profits by cashing in on commercial properties. If debt plagues your wallet and you’re looking for a way to escape it as quickly as possible, commercial investment provides a great avenue for you to obtain high-profit yields and successfully pay off your debts. Here’s how:
Multiply Cash Flow with Leverage
By placing “positive leverage” on an asset, you can multiply the amount of net expendable cash by borrowing capital at a lower rate than the property provides you. For example, let’s suppose a friend loans you $20 and they ask for $21 back, to include interest. Then, you immediately loan that $20 to someone else and ask for $23 back – letting you pay back the $21 you owe and make a profit of $2 with no additional investment.
Pretty simple, right?
If you’re looking to pay off your debt as quickly as possible, be sure that you look away from banks and more toward private lenders. Why? Well, banks move much slower because of the abundant red tape that they have to go through before providing a loan. This is primarily a result of the 2008 recession, where banks were providing loans much quicker than they should have. Due to this, heavy regulations were imposed on banks, making private lenders the expedient loan provider as they face dramatically less regulation.
Furthermore, you can use the loaned money you receive to make cost-effective improvements on commercial property that you may already have a stake in. By upgrading the property, you directly improve the desirability and utility of the asset, which quickly causes the property value to rise and allows you to charge higher lease rates.
For example, if you own an apartment complex, consider installing granite countertops. The beauty of granite is its low maintenance requirement, long-term durability, and 20-30 percent return on investment.
Just be sure that you’re cautious when upgrading. One common error many people make when first upgrading their commercial properties: they try to implement the upgrades themselves. When it comes to commercial investments, be sure you’re putting the proper money into upgrades; and that includes hiring professionals to take care of the maintenance.
Commercial investments are a great way to get rid of your debts and make money in a short period of time. However, if you want to make the process quick, be sure to check out private lenders. If you’re wondering if you’re qualified for a loan from Specialty Lending Group, click here to learn more.