Why Investing In Commercial Real Estate Foreclosures Is Risky Business

If you are one of those forward thinking people out there that are trying to capitalize on the recent down turn in the real estate market, then you probably have been looking into foreclosures as a fast way to make a buck. For home foreclosure listings this can most definitely be the case, but a commercial real estate foreclosure offers a bit more of a challenge.

Why A Commercial Real Estate Foreclosure Is Risky

There are several factors that make investing in a commercial real estate foreclosure very risky. The first reason is that when you compare commercial real estate and home real estate you really are looking at two completely different categories of property ownership. In residential real estate, primarily it is used as a home and not a place of business. In commercial real estate, it is wholly dedicated to business. Now if the property is a commercial real estate foreclosure, then you can bet that whatever business was located there failed and more than likely there is a reason for this. If the reason for the failure has not changed and you are looking at an investment opportunity in the commercial real estate foreclosure, then you need to think long and hard about what you are getting yourself into. I would be especially leery of any commercial real estate foreclosure that looks too good to be true because more than likely it is.

The next reason you want to be very careful of a commercial real estate foreclosure property is there probably was not anyone every living there. At least with a residence you can assume that any damage caused by the people could only be so much as they were living in the property, this is completely not the case with a commercial property. Years and years of neglect and misuse could be hiding in the establishment as the owner tried fruitlessly to use all his money to keep the business a float. Obviously since the commercial real estate foreclosure is in effect this was not successful, and you can bet that the previous owner stripped everything he possibly could out of the property.

It is for these reasons I would be really careful before plunking down my hard earned cash on a commercial real estate foreclosure. You may think otherwise, but I advise caution. In the end the decision is up to you, whichever way you decide do your research completely.


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