2023 Commercial Real Estate Trends 

Asset Class Breakdown 

Depending upon what asset class you are working with, your success in the market could vary greatly since each one has its own unique challenges. Let’s compare which asset classes are succeeding or struggling: 

What’s Working 

Multifamily Housing: According to Moody’s Analytics, multifamily housing has continued to fair well over the last couple of years, with developers continuing to add to the ever-growing supply. Where the national vacancy rate was 4.5% at the end of 2022, the median vacancy rate was 3.9% in April 2023.  

Industrial and Retail: Along with apartments, National Association of Realtors® Chief Economist Lawrence Yun pointed to industrial and retail class assets as  keeping the commercial real estate industry relatively stable. Between industrial and retail real estate, 361 million square feet and 64 million square feet of net positive absorptions, respectively,  were added between May 2022-2023.  

What’s Not 

Office Space: The COVID-19 pandemic created a wave of change for how businesses approach work that still has an impact on the commercial real estate market today. With remote and hybrid office work remaining an increasingly popular option, the demand for office space has dwindled. According to JPMorgan, although A-class properties with leases of 10 years or more are performing well, B- and C-class offices with shorter leases could struggle.  

Taking in these considerations along with the impact of the increasing interest rates from the government, Yun estimates that the commercial real estate transaction volume will overall decline in 2023 by 27%.  

One of the commercial real estate trends we’re seeing in 2023 is the reduced use of office space.

Other Real Estate Trends to Follow 

Life Science on the Rise 

Life science real estate, including laboratory and research facilities, is an emerging asset class that is gaining interest from investors. Stemming from the pandemic’s uncovered need for proactive medicine development, this type of real estate is expected to be prominent throughout 2023 as the demand for medical research facilities and specialized properties grows.  

Keep Technology Top of Mind 

In his article for Forbes, 15-year commercial real estate veteran Ryan McKenzie slated the impact of technology as one of the top 2023 real estate trends to follow. We’re beginning to see a significant shift towards the use of advanced technology within both residential and commercial real estate. Virtual property tours are becoming more popular as they allow investors and tenants to view properties remotely and the use of blockchain enables secure, transparent, and efficient transactions. 

Perpetual Title Tip: Want to learn how Perpetual Title has innovated when it comes to real estate technology? Discover how we helped deliver the world’s first place to buy and sell U.S. real estate using cryptocurrency.  

Make Commercial Real Estate Trends Work for You 

While there are challenges and uncertainties within the commercial real estate space, there are also unique opportunities and trends worth capitalizing on. To navigate the market successfully, investors and other stakeholders should stay informed about these real estate trends and remain open to changing circumstances. By doing so, they position themselves for success in the dynamic and evolving world of commercial real estate. Ready to learn more? Gain greater confidence by learning how to use commercial reals estate as an inflation hedge. 

The post 2023 Commercial Real Estate Trends: Planning for the Future first appeared on Perpetual Title.

What is Wholesale Real Estate?  

The term wholesaling is often associated with the retail industry as wholesale companies sell a high volume of goods to retailers who then sell to consumers at a higher price. Wholesale companies can sell their products at a lower price due to the high quantity of goods sold. While the name may suggest that real estate wholesaling follows the same pattern, this is not the case.

In wholesale real estate, a wholesaler will sell a property on behalf of the owner for a profit. The wholesaler and owner enter into an agreement in which the wholesaler will sell to another buyer. The wholesaler never purchases the property but the contract they originally entered into with the owner allows them to sell the property and keep the profit for themselves.

Wholesale real estate properties are often properties that are distressed and off-market. The original owners may be facing foreclosure, no longer want the home, or may just be avoiding the time and resources required for a traditional sale. This allows wholesalers to enter into a contract with the owner to take it off of their hands.

The basics of real estate wholesaling are simple as illustrated by Visual Real Estate.

Benefits of Wholesale Real Estate

Little Capital Necessary

• Compared to other types of real estate investments, wholesaling does not require investors to purchase the property and is great for beginner investors since it requires little capital to get started.

Gain Insight About the Market

• For new investors, wholesale real estate is a great way to break into the industry. Wholesaling requires an understanding of the current market, location, and provides opportunities to network with others.

Potential Large Profits in Short Period

• Wholesale real estate deals typically do not take more than a few months and could result in substantial profit for the investor. In some instances, deals can be closed in 45 days or less.

Potential Risks with Wholesaling

Income is Unpredictable

• The housing market is unpredictable and there is no guaranteed income when investing in wholesale properties. Investors may lose out on a deal if they don’t sell a home or may face difficulties finding properties in the first place.

Lower Profit Margin

• While less investment is required upfront, real estate wholesaling often has lower profit margins than other types of property investments. However, this lower profit margin is coupled with lower risk and less capital required on the part of wholesalers.

Difficulty Identifying Buyers and Sellers

• In order to earn profits, you need property owners who are willing to sell and others who are willing to purchase the property. For beginners, this can be difficult to assess when first entering the market.

Networking online with real estate professionals and other investors can open the door to opportunities.

Advice to Get Started

Getting started with wholesale real estate is not as complicated as you may think. To begin, check out these tips:

Research Your Area’s Market

Understanding your local market and what is available to you is the first step in the process. Once you find a property, you should also understand comparable home sales within the neighborhood; this allows you to assess whether homes are prices under-market value. One way to access this type of data is by partnering with a local real estate agent who has access to the MLS.

Create a Buyer and Client List

Once you have a grasp of what your local market offers, the next step is to generate leads of buyers and sellers interested in wholesaling. While the quantity of leads is great, having a smaller, more dedicated list of clients is even better. Networking on social media, real estate investment groups, or chatting with agents, title professionals, tax advisors, and attorneys can help you identify potential opportunities.

Identify Resources for Properties

While networking does a great job of building a buyer’s list, there are also resources available:

• Subscribe to Wholesaler’s Buyer Email Lists in Your City
• U.S. Department of Housing and Urban Development (HUD) lists foreclosed properties that were financed by an FHA-backed mortgage.
• Craigslist has hundreds of properties for sale and for rent in any city, these could be a potential source for a future deal.
• Realtor.com provides listings for over 800 MLS databases and allows users to search for foreclosures and sign up for email notifications.
• Auction.com allows investors to attend auctions online for numerous types of properties including real estate owned, short sales, and foreclosures.
• Realtytrac.com focuses on foreclosures locally and across the country.

Keep all Parties Involved

Serving as the middleman, it is the wholesaler’s responsibility to keep everyone involved until closing is completed. Taking the time to keep the seller and buyer informed is not only great for customer service, but also builds stronger relationships with both parties.

Follow up Post-Closing

Once the closing is completed, your job isn’t over just yet. Every deal gives you a chance to grow your network, so afterward be sure to follow up and make sure everyone is happy. This also keeps your name on their mind and can lead to future business.

Is Wholesale Real Estate the Investment Strategy for You?

Wholesale real estate is a great opportunity for new investors to enter the real estate market. Like other forms of real estate investments, there is risk associated but it can be worth it if you have the passion to pursue it and partners to help you along the way. At Perpetual Title, we help investors make sound financial decisions and protect their investments from any title defects. Interested in learning more about our national title and escrow services? Contact our team!

The post What is Wholesale Real Estate? 5 Tips for New Investors first appeared on Perpetual Title.

Purchasing commercial real estate property comes with its own unique set of challenges. Complex legal descriptions, zoning challenges, building renovations, and multiple corporate owners prove that purchasing a commercial property can take some time. However, one way to alleviate some future headaches is by purchasing a commercial title insurance policy for your property. While most insurance policies protect you and your property from future circumstances, a title insurance policy protects you from what occurred long before the property was yours.

What is Commercial Title Insurance?

Title insurance is a type of insurance that protects the buyers from any issues associated with the property’s title. Title insurance is used in both residential and commercial transactions, however, because commercial properties involve much more capital, title insurance plays a crucial role in purchasing commercial properties. As previously mentioned, most insurance policies protect the policyholders from future situations whereas title insurance protects against situations that have occurred in the past such as unpaid taxes or liens against the property.

In title insurance, there are two forms of policies: owner’s and lender’s. An owner’s policy is purchased to protect the buyer if any defects arise, and a lender’s policy is used to protect the lender as long as they have interest in the property. Both owner’s and lender’s policies are one-time premiums that provide coverage for as long as there is interest in the title for the property. To learn more about the differences between the two, check out our blog, The Two Types of Title Insurance.

Conducting a Property Title Search

With every title insurance policy, the buyer will receive a title search. A title search is a thorough investigation of the property including previous deeds, mortgages, and easements. The process will also reveal any potential defects associated with the home’s title. From unpaid utility bills to encroachment notices, the title search will allow for any issues to be addressed before closing. Title insurance safeguards your investment by ensuring that it is protected from issues and claims now and in the future.

A title search will uncover any potential issues before contracts are finalized.

Commercial Title Insurance Coverage

When investing in a commercial property, protecting your investment is a top priority. With an owner’s commercial title insurance policy, you are protected against losses that may occur due to:

• Unknown title defects including title fraud, forged, unauthorized or improperly indexed deeds that prevent the buyer from possessing clear ownership of the property.
• Unrecorded liens such as unpaid utility bills, taxes, mortgages, and work orders.
• Encroachment issues and boundary descriptions inconsistent with the area being used.
• Inaccurate legal descriptions along with public record errors including title searches and inquiries

Protect Your investment with Millennial Title

Title insurance protects your commercial property from any financial loss due to unexpected issues with the title. With title insurance, you can rest assured that your investment is protected until you decide to sell the property. Perpetual Title provides commercial real estate title services across the country. With in-house attorneys and a team of real estate experts, we have the experience and knowledge to manage your next commercial transaction. To learn more about commercial title insurance, schedule a closing, or learn more about our offerings, contact a member of our team today.

The post Why Does My Property Need Commercial Title Insurance? first appeared on Perpetual Title.