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Answers - Should You Invest in Residential or Commercial Properties?
Most people in Northern CA started investing in real estate by buying their own homes. And most have made money as real estate in Northern CA has continued to appreciate in value. So when they move up, they decide to rent out their first homes. And then they acquire a few more homes. They know they have negative cash flow but make a profit because of ap
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
preciation. This is the typical story how most real estate investors invest in residential properties. So far luck has been on their side.
As the interest rates have gone up gradually in the last 12-24 months while the rents in the Bay Area remain very much flat, the negative cash flow gap is widening. The risk for investing in residential properties i
As the interest rates have gone up gradually in the last 12-24 months while the rents in the Bay Area remain very much flat, the negative cash flow gap is widening. The risk for investing in residential properties i
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
increasing. The same old formula of investing may not work anymore. In the best case, investors may still make money but not as much in term of percentage since the value of real estate is pretty high already. In the worst case, investors may lose money as residential real estate may remain flat or even decline in value. Is there a solution for real
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
state investors in Northern CA? Of course, these investors can use the same old formula in a new area that has potential for appreciation. So the key is to find this new area. They just have to talk to someone who knows this new area. It could be Bakersfield or Sacramento or Fresno. Alternatively, investors can put money in commercial properties: ret
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
il strips, shopping centers, medical office buildings. Let’s just explore this paradigm shift to see if it makes investment sense.
1. Income: commercial properties generate 50 to 200% more rental income compared to residential properties in the Bay Area. In addition, there is no rent control for commercial properties. So landlords can charge your
1. Income: commercial properties generate 50 to 200% more rental income compared to residential properties in the Bay Area. In addition, there is no rent control for commercial properties. So landlords can charge your
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
tenants as much as the market permits.
2. Leases: in general commercial real estate leases are more favorable to landlord compared to residential leases. Besides the base rent, tenants also have to pay landlord for property taxes, insurance and all maintenance expenses. These leases are called Triple Net or NNN leases. Because of this type of
2. Leases: in general commercial real estate leases are more favorable to landlord compared to residential leases. Besides the base rent, tenants also have to pay landlord for property taxes, insurance and all maintenance expenses. These leases are called Triple Net or NNN leases. Because of this type of
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
ease, commercial properties are better maintained than residential properties. Besides, the NNN leases also take away a lot of risks from the landlord as maintenance costs are unpredictable. On the other hand, landlords tend to defer maintenance on residential properties to reduce the cost. Consequently, the deferred maintenance will have negative impac
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
on the value of the properties.
3. Better Tenants: tenants for commercial properties are financially stronger. They may be Walmart or Home Depot with billions of dollars in the bank. They are less likely to nickel and dime with you. In addition, they also guarantee the lease with their assets. If for some unforeseen reasons they have to vacate
3. Better Tenants: tenants for commercial properties are financially stronger. They may be Walmart or Home Depot with billions of dollars in the bank. They are less likely to nickel and dime with you. In addition, they also guarantee the lease with their assets. If for some unforeseen reasons they have to vacate
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
the property, they continue to pay the rent or find another tenant to sublease it. They are also motivated keep your property in good condition to attract their customers to their stores. While majority of residential tenants are good, some think once they pay the rent they have a license to trash your properties and then disappear in thin air with no fo
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
rwarding address!
4. Long term lease: commercial tenants are less likely to move. They often sign 5-10 year leases. Tenants like Walgreens, and Walmart sometimes sign 20-50 year leases. In contrast, residential leases are short term. They could move out to a new place a mile away to get a $25 rent relief! It’s a fact that the turn over rate f
4. Long term lease: commercial tenants are less likely to move. They often sign 5-10 year leases. Tenants like Walgreens, and Walmart sometimes sign 20-50 year leases. In contrast, residential leases are short term. They could move out to a new place a mile away to get a $25 rent relief! It’s a fact that the turn over rate f
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
r residential tenants is very high compared to commercial tenants. As a landlord, this gives you more unneeded migraine headaches and stress.
5. Management: It’s much easier to manage a 10-tenant shopping center than 10 individual homes in 10 different places. As a matter of fact, if you own 10 residential rentals your tenants most likely have w
5. Management: It’s much easier to manage a 10-tenant shopping center than 10 individual homes in 10 different places. As a matter of fact, if you own 10 residential rentals your tenants most likely have w
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
rn you down and we are exhausted. They often move out in the summer just around the time you want to take off for vacation. Yes, it’s a fact that residential properties are very management intensive because of high turn over rate. If you have to hire a property manager, it also costs more in terms of percentage of the rent to manage residential properti
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
s. Besides, it probably is a full time job just to manage these 10 property managers!
6. Income Tax Returns: it’s much easier to keep track of records for income tax purposes for a 10-unit shopping center than 10 separate residential rentals in several states. You just need to have one file for the shopping center while you will need 10 folders f
6. Income Tax Returns: it’s much easier to keep track of records for income tax purposes for a 10-unit shopping center than 10 separate residential rentals in several states. You just need to have one file for the shopping center while you will need 10 folders f
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
or 10 residential rentals. The task becomes more challenging as the IRS requires you to keep records for several years. Your out-of-state income tax return is also thinner for a 10-unit shopping center than 10 residential rentals.
7. Tax Write-offs: commercial properties offer the same tax write-offs, 1031 exchange as residential rentals.
8.
7. Tax Write-offs: commercial properties offer the same tax write-offs, 1031 exchange as residential rentals.
8.
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
Credit Scores Impact: most people don’t know that once they have about 10 residential mortgages, their credit scores will start going down. The credit bureau reasons that credit risk is higher the more money you borrow and 9-10 mortgages seem to be the threshold. On the other hand, commercial mortgages have no negative impact on your credit scores a
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
these mortgages are not reported to the 3 credit bureaus.
9. Pride of Ownership: most commercial properties are referred to by name and not by their addresses, for example Lion Plaza, or Valley Fair Shopping Center. They could be trophy properties that offer enormous pride of ownership. You get lots of respect when you tell people you own a cert
9. Pride of Ownership: most commercial properties are referred to by name and not by their addresses, for example Lion Plaza, or Valley Fair Shopping Center. They could be trophy properties that offer enormous pride of ownership. You get lots of respect when you tell people you own a cert
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
in shopping center they know.
10. Investment size: commercial properties often require substantial amount of money so it’s not meant for someone with a modest amount of money.
So if you want to work hard for your money or bet on appreciation then invest in residential. If you want to work smart, go after commercial properties. Commercial real e
10. Investment size: commercial properties often require substantial amount of money so it’s not meant for someone with a modest amount of money.
So if you want to work hard for your money or bet on appreciation then invest in residential. If you want to work smart, go after commercial properties. Commercial real e
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
state investment is a more prudent way to invest in real estate if you have more equity for down payment. Each month you have strong positive cash flow so you don't need to rely on just appreciation to make money. So if you have not invested in commercial real estate, you now know why you are not among the elite group of real estate investors. You prob
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
bly wonder where you should go from here if you want to explore this possibility further. In the coming issues, these topics will be discussed
• Which commercial property should you invest?
• Where should you invest in commercial real estate?
• How to pick and choose a good commercial property
• What you should know before hiring a property management
• Which commercial property should you invest?
• Where should you invest in commercial real estate?
• How to pick and choose a good commercial property
• What you should know before hiring a property management
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
company
If you cannot wait for those articles, you can sign up for a free seminar about Commercial Real Estate Investment at eFunding (www.efundingcom.com, phone number 408-288-5500). San Jose Real Estate Investor Club (phone number 408-264-3198) occasionally offers a similar seminar for a small fee
If you cannot wait for those articles, you can sign up for a free seminar about Commercial Real Estate Investment at eFunding (www.efundingcom.com, phone number 408-288-5500). San Jose Real Estate Investor Club (phone number 408-264-3198) occasionally offers a similar seminar for a small fee
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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