Hi guys, my name is Bryce Yamauchi and I’m the commercial originator here at Bay Mountain Capital. And today we’re going to be talking about three reasons to invest in commercial real estate.
Multiple tenants mean a more diverse stream of cash flow. Business leases are generally longer-term than residential leases. Commercial tenants are business owners and therefore more reliable in general than residential tenants. Watch to learn about three reasons you should invest in commercial real estate.
Reliable cash flow, strong potential for increasing value and diversifying your investment portfolio.
Commercial real estate is a proven and safe investment class that provides predictable cash flow on a regular basis, and furthermore is backed up by the actual real estate itself.
So for example, if you buy a property for $1,000,000 with a net operating income of $50,000, you’re buying it at a 5% cap rate. Now let’s say you’re able to increase the net operating income $10,000 to $60,000. Now, all of the sudden, at the same 5% cap rate, you’ve increased the value to $1.2 million, thereby creating $200,000 in value for a simple $10,000 increase in net operating income.
Commercial real estate is much less volatile than the stock market, which fluctuates from day to day and even hour to hour. The cash flow from commercial real estate is real and tangible and can be relied on, as opposed to stocks, many of which do not even pay a dividend. In commercial real estate, your rent is being paid by a business owner, as opposed to residential real estate, where your rent is being paid by the tenant, who is often an employee of the business owner, thereby reducing your risk.
Commercial real estate deals tend to be larger in nature than residential real estate deals, thereby increasing the capital and liquidity requirements. There’s a steeper learning curve in commercial real estate deals, as there are a lot more variables and things to consider. This results in a lot more things that could go wrong and ways to lose money. Bay Mountain Capital has a proven track record in commercial real estate, with over $100 million originated in commercial real estate loans. Interested in taking the plunge, or have any further questions? Don’t hesitate to contact one of us today. Thank you for watching.
About Bay Mountain Capital:
Bay Mountain Capital has been in business for more than a decade, closing approximately 2,000 loans. We specialize in financing all types of residential and commercial property investments throughout Texas and Georgia. Using common sense and value-added approach, we strive to incorporate these principles into our underwriting and closing processes.
As a direct lender, Bay Mountain Capital can close a loan within one day after receiving a complete file and clear title. The process generally takes two weeks for a residential loan but can be accelerated where circumstances require it.
We are primarily an asset-based lender, which means that qualification requirements are limited. Our rates and fees are among the lowest in the industry.