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March 2023

Gottlieb Law - Creative Financing Options for Buying Investment Real Estate

Get the Deal Done with Creative Finance Options for Investment Properties

Get the Deal Done with Creative Finance Options for Investment Properties 1773 1182 Gottlieb Law

Most people are familiar with the traditional financing process for buying a property.  Apply for a loan with a mortgage lender, get approved and use the qualification letter to go through the process of buying a property.  The problem for investors is that it can be difficult to obtain traditional financing for investment properties.  While there are some options, many investors will need to be familiar with creative financing options if they want to expand their investment portfolio without using all of their own savings on deals.  Here are some of the most important things to understand about using creative finance options for investment properties. 

Hire Professionals to Assess and Manage Risks

Before utilizing any creative financing options to purchase real estate, it is important to understand all investments have risk and each individual should review the property and potential financing options with qualified professionals, like financial advisors, real estate attorneys, accountants, real estate agents, mortgage brokers and experienced real estate investors, that can help assess whether you should proceed with the deal.  With creative financing, there are risks in the investment itself and the structure or contract used to secure that particular financing option.  It is vital to work with a team of experienced real estate professionals if you want to have the best chance at growing a long term portfolio of investment real estate.

Understanding Creative Financing Options

There are a few key categories of creative financing options beyond traditional mortgages available to those looking to purchase investment real estate. These include seller financing, hard money lenders, partnerships, lease options, and seller take-back mortgages. Private money lenders are another option, typically individuals or small organizations that are willing to loan you money for a property. Hard money lenders are more expensive, but often work with borrowers with less-than-perfect credit. Each of these options come with their own set of pros and cons, and it’s important to understand the details of each before making a decision. With the right financing option, you can purchase the property you need to grow your wealth.

There are many creative financing options available to purchase investment real estate and these are just a few of the more popular options.  Here is a brief overview of different creative financing options that can be utilized by real estate investors:

  1. Seller Financing: The seller effectively becomes the mortgage lender to the buyer.  The buyer agrees to a purchase price, length of mortgage term, interest rate and monthly payment on the home.  This option can be more attractive to sellers when interest rates are high.  While seller financing is common, buyers and sellers should consult with an experienced real estate attorney and accountant to structure a contract that accomplishes the agreed upon terms and provides ample protection for their interests.
  2. Hard Money Lenders: These private lenders are typically used for short term financing, commonly used by investors looking to fix-and-flip a property.  They can also be used to secure a property if you have vetted plans to restructure the ownership after closing.
  3. Partnerships:  There are many experienced real estate investors looking to partner on residential and commercial real estate investments.  Building a network of active investors and keeping track of their preferred investments can provide lots of ways to finance a real estate purchase.  This can be a great way to get started for people without the resources to buy their own investment property and can provide a great education on evaluating potential investments and closing deals.
  4. Home Equity Lines of Credit (HELOC) or Retirement Accounts: It is common for people that own a home to use a line of credit from their equity to purchase investment real estate.  Many people also use their self-directed IRA or 401(k) to invest in real estate.  Just make sure that you understand these methods put your home and retirement savings at risk if there are issues with the investment property.  It is more important than ever to have a professional team representing your interests if you are pursuing these financing options for investment real estate.

Benefits of Creative Financing 

While we have explained and continued to stress there are risks, there is no doubt that creative financing has helped many investors get more deals done. For starters, many creative financing options require a lower down payment than traditional financing, making it easier for investors to get into a property. Some creative financing options can come with lower interest rates, making it easier to manage the cost of financing. Furthermore, the qualification requirements for these financing options are often simpler and more flexible than traditional financing, providing potential buyers with more options. The closing process for these financing options can also be much quicker than traditional financing, allowing buyers to get into their investment property in a timely manner.  Many experienced investors use traditional and creative financing options to fund their investments and projects.  Experienced investors generally understand that creative financing can be another valuable tool for them to use when it benefits them most and can be structured to adequately protect their financial interests.

Drawbacks of Creative Financing 

When it comes to purchasing investment real estate, there are many creative financing options available. However, these options can come with drawbacks. For example, repayment terms can be shorter, and only certain types of property may qualify. It is important to weigh the pros and cons of each available financing option to determine the best fit for your individual investment goals. Additionally, it is always wise to enlist a financial advisor to help you navigate the various creative financing options, as well as the associated risks and costs. Ultimately, creative financing has been used successfully by many investors to get into the investment property market, but it is important to do your research and consider all of the potential drawbacks with experienced real estate professionals representing your interests.

Work with an Experienced Real Estate Attorney for Creative Financing

When it comes to purchasing investment real estate, there are a variety of creative financing options that can be utilized to get investment deals done. From seller financing and home equity loans to hard money or private money loans, each financing option has its own benefits and drawbacks. Seller financing, for example, can potentially provide more favorable terms, but it also requires that the seller is willing and able to offer such terms. On the other hand, home equity loans and lines of credit can be easier to secure, but they typically have higher interest rates and additional risks in the event of a default. Hard money and private money loans are more expensive and require more time and effort to acquire, but they can offer more flexibility once secured. Ultimately, each financing option has its own advantages and disadvantages, and it is important for potential investors to understand the different options so that they can make an educated decision about which one best suits their needs.  

At Gottlieb Law, we can help real estate investors with every aspect of finding and securing investment real estate.  Our experienced real estate attorneys can also assist with reviewing potential financing structures and contracts to minimize risks.  Contact our firm today at 602-899-8188 to schedule an initial consultation or make an appointment on the contact us page of our website.

Gottlieb Law published this article solely for informational purposes and nothing in this article creates an attorney-client relationship for any specific scenario regarding real estate financing.

Gottlieb Law - How Technology is Transforming Commercial Real Estate Industry

How Technology is Transforming the Commercial Real Estate Industry

How Technology is Transforming the Commercial Real Estate Industry 1772 1183 Gottlieb Law

The commercial real estate industry has long been associated with traditional, manual processes and procedures. However, in recent years, technology has been rapidly transforming the way that commercial real estate is developed, marketed and managed. From the use of proprietary software to the deployment of robotics, technology is revolutionizing the commercial real estate industry, offering new opportunities for efficiency, sustainability, and profitability.

In this article, we will explore the impact of technology on commercial real estate and look at some of the latest trends and innovations that are driving this transformation.

3D Digital Twins Reduce Costs and Increase Automation

The use of 3D digital twins (immersive, interactive digital version of properties) is becoming more prevalent in the real estate market as they evolve from technical tools to commercial assets. In 2023 and beyond, the industry will witness an increased competitiveness among digital twin providers as they develop and integrate new technologies, like artificial intelligence, virtual reality and augmented reality based features.

The growth of 3D digital twins is expected to reduce costs and increase automation because they offer better graphics and gamification elements than 3D tours and, therefore, cut down the time spent on due diligence and negotiations. Digital twins will also be used as an integrated administrative tool, providing tenants with easy-to-use features such as booking a meeting room (from the digital twin) or joining a virtual office.

Furthermore, digital twins will play a vital role in meeting the new expectations of customers and the future generation of workers, such as providing flexibility and accommodating digital nomad visas. Lastly, digital twins will contribute to Environmental, Social, and Governance (ESG) initiatives by reducing carbon dioxide emissions resulting from travel and printing materials.

Building Information Modelling Software Enables Better Project Management

Building Information Modelling (BIM) software is a powerful tool used by architects, engineers, construction professionals and property developers to create detailed digital models of buildings and infrastructure. BIM software allows these professionals to collaborate more effectively and efficiently, by sharing a single digital model of a building project that can be used by all stakeholders throughout the entire lifecycle of the project. 

For starters, BIM software allows users to create detailed 3D models of buildings that can be visualized from all angles. This helps identify design issues and clashes (plus cost estimates) before construction begins, reducing the risk of errors and delays during construction. Multiple users can then work on the models simultaneously, so there is a reduced chance of error and fewer misunderstandings. During development, the software allows users to manage the project’s lifecycle and ensure stakeholders have real-time information. 

Finally, BIM software also helps developers create sustainable building designs by allowing users to model the environmental impact of different design choices and optimize building performance for energy efficiency, water conservation and other sustainability metrics.

Drones and Robots Perform Dangerous, Difficult and Time-Consuming Tasks

Drones and robots are playing an increasingly important role in the construction industry, allowing developers, engineers, and contractors to perform tasks more efficiently and safely. Drones are commonly used for site surveys, providing high-resolution aerial images and data that can be used for mapping, measurement, and topographic analysis. This data can be used to create accurate 3D models of the construction site, which can help to optimize the design and planning of the project.

Robots are also being used in construction, particularly in tasks that are dangerous or repetitive. In particular, robots can be used for demolition, excavation, and heavy lifting, reducing the risk of accidents and injury for human workers. Robots are also being used for tasks like bricklaying, concrete pouring, and welding, improving speed and accuracy while reducing labor costs.

Drones and robots in construction enable users to collect and analyze large amounts of data quickly and accurately, which can then be used to optimize construction processes, reduce waste, improve safety, and increase efficiency.  For example, by using drones to survey a construction site, contractors can identify potential hazards and optimize the placement of materials and equipment, reducing the risk of accidents and delays. And the cost reduction is undeniable — robots can generally perform tasks more quickly and accurately than human workers, and drones can monitor construction progress, reducing the need for human supervisors and saving time and money.

Technology Simplifies Property Management

There’s a whole host of technology that is transforming the way that commercial properties are managed, making it easier and more efficient to monitor building performance, provide tenant services, and optimize building systems. 

Internet of things (IoT) sensors, to name one example, are being used to collect data on everything from energy usage to air quality and occupancy rates. Commercial real estate investors can then use this data to optimize building performance, reducing energy costs and improving tenant comfort and safety. Property owners also use Building Automation Systems (BAS) to control and monitor building systems, such as HVAC, lighting, and security, from a centralized platform — which can also provide guidance on how to enhance the tenant experience.

Another way to leverage technology, predictive maintenance uses data analytics to identify potential maintenance issues before they become major problems. This can reduce repair costs and downtime, while also extending the lifespan of building systems and equipment.

Find an Experienced Commercial Real Estate Attorney

As technology continues to advance, we can expect to see even greater innovations and improvements in the development, marketing and management of commercial real estate properties. Investors should partner with an experienced real estate attorney who is familiar with the latest technology and how it can impact their investments if they are looking for simple ways to improve their commercial real estate business.  Gottlieb Law provides industry-leading legal representation for anyone involved in Arizona commercial real estate.  Contact our firm today at 602-899-8188 or schedule an initial consultation on our contact us page.

Gottlieb Law - Understanding Commercial Real Estate Law in Arizona

Growing and Protecting Your Portfolio: Understanding the Complexities of Commercial Real Estate Law in Arizona

Growing and Protecting Your Portfolio: Understanding the Complexities of Commercial Real Estate Law in Arizona 1773 1182 Gottlieb Law

Commercial real estate in Arizona can be a lucrative investment, but navigating the legal landscape can be challenging. There are a number of laws and regulations that property owners and tenants must follow, which govern everything from zoning and building codes to tenant rights and environmental regulations. It is important to understand these laws to avoid legal disputes, ensure compliance, and protect your portfolio.  That being said, the law takes a relatively “hands-off” approach to commercial real estate, assuming that commercial real estate investors, landlords, and tenants are sophisticated parties. 

In this guide, we will provide an overview of some of the key commercial real estate laws in Arizona that property owners and tenants need to know. Whether you are a landlord, tenant, or real estate investor, this information can help you maneuver the legal complexities of commercial real estate in Arizona. 

Lease Agreement

The lease agreements executed with tenants is the key, operative legal document that must be reviewed carefully.  The lease agreement will generally contain provisions relating to the security deposit, intended use of property by the tenant, commencement date, rental rate, length of tenancy, rights of renewal, maintenance obligations of the tenant and landlord, insurance, default, and remedies.  

Property owners and real estate developers in Arizona should work with an experienced real estate attorney to ensure any leases signed before a project’s completion are realistic and attainable and contain necessary provisions.

Right to Quiet Enjoyment

Many commercial leases have provisions pertaining to the right of quiet enjoyment, which in Arizona is a legal principle that protects tenants from having their peaceful enjoyment of the property disturbed by their landlord or anyone else who might interfere with their use and enjoyment of the property. If a landlord violates a tenant’s right to quiet enjoyment, the tenant may be able to take legal action against the landlord.  It’s important to note that the right to quiet enjoyment is not absolute and may be limited in certain circumstances, such as when the landlord needs to enter the property to make repairs or address an emergency situation.

Subleasing Commercial Property in Arizona

Commercial tenants in Arizona can typically sublease or assign their lease to another party, unless expressly prohibited by the landlord in their lease agreement. The landlord should be aware of this right and the lease should contain provisions protecting the landlord’s interests if the landlord does not want the property subleased.  

The addition of a clause requiring landlord approval for any sublease or assignment can give the landlord peace of mind and keep the decision in their hands. While most landlords may prefer to have a tenant through subletting or assignment rather than no tenant at all, it is important to be aware of this right and take the necessary steps to protect their property and interests.

Arizona Commercial Evictions

Regrettably, those who have owned or invested in property may have encountered tenants who have not fulfilled their obligation of paying rent. In such cases, landlords should review their lease to determine if a lockout is permissible, and if so, ensure they adhere to the necessary protocol. According to state law, and if not provided any further rights in the lease agreement, tenants have a period of five days to pay rent once due, and upon the expiration of that timeframe, the landlord may lawfully enter and regain possession of the premises, in accordance with A.R.S. § 33-361.

In the event that the landlord takes possession of the premises, it shall possess a lien on all of the tenant’s personal property and may hold it as a means of demanding payment.  The landlord generally provides notification prior to a lockout or sale taking place, and the majority of lease agreements necessitate notification. 

Landlords should consider each situation on a case-by-case basis and may want to seek advice from an experienced commercial real estate attorney.

Find an Experienced Arizona Real Estate Attorney

These are just a few of the main commercial real estate laws in Arizona that property owners should be aware of. It is important to consult with a qualified attorney to ensure compliance with all applicable laws and regulations.

The attorneys at Gottlieb Law have provided industry-leading legal representation to our clients in all things real estate law in Arizona. We work with individuals and businesses on everything from their first home purchase to complex development projects.  Contact our firm today at 602-899-8188 to schedule an initial consultation or make an appointment on our contact us page.