HOW TO FIND BANK-OWNED COMMERCIAL REAL ESTATE PROPERTIES THAT YOU CAN BUY

Buying a commercial property on the market can be a lengthy and stressful responsibility. However, before making that offer, you should know what bank-owned properties are.  Bank-owned property is real estate that was once financed by the bank but defaulted on by the buyers. The bank then takes the property back into its possession and attempts to sell it to someone else.

Finding bank-owned commercial properties for sale can give you a low-cost way to enter the commercial real estate market. Banks often gain control of commercial properties when investors can’t repay their loans. Banks don’t want to hold the real estate any longer than necessary. They want to sell commercial properties so they can cover the rest of the mortgage. This creates a unique opportunity for you to find commercial real estate at below-market prices.

A bank-owned property or real estate-owned (REO) property is a property that has been foreclosed on by the mortgage lender. When you purchase a bank-owned property, you go directly through the bank, so you won’t have to deal with any homeowners. Once the mortgage lender or bank owns the property, they can evict the current residents, pay off any necessary tax liens, and make any necessary repairs.

A lot of people find purchasing a bank-owned commercial property to be a difficult task. When the bank has owned the property for an extended period of time, it is more likely to seriously consider low offers. If the property is in an area with a high rate of foreclosures, you could make an initial bid of 20% less than current market values or even more. The bank attempts to sell the property at auction after taking back the property from the owner who defaults on it. The auction is referred to as a mortgage foreclosure auction.

There are many reasons why a commercial property may be owned by a bank. The most common reason is that the previous owner failed to make mortgage payments and the property was foreclosed on. Other reasons may include the owner voluntarily giving the property to the bank or the property being part of an estate that was not paid off. Whatever the reason, bank-owned commercial properties can be a great deal for the right buyer. 

The key is to do your research and work with a qualified real estate agent to find the best property for your needs. The commercial real estate market is constantly changing, and so are the opportunities for finding bank-owned commercial properties. However, there are certain steps that you can take in order to increase your chances of finding these types of properties. 

First, you need to understand what bank-owned commercial properties are. These are properties that have been foreclosed on by the bank and are now owned by the bank. These properties are usually sold at a discount in order to get rid of them quickly. The next step is to find out where these properties are located. You can do this by searching online or contacting a real estate agent who specializes in bank-owned properties. 

Once you have a list of potential properties, you need to research each one. This includes looking at the property itself, the surrounding area, and the asking price. You also need to make sure that you are getting a good deal by negotiating with the bank. If you follow these steps, you will be able to find bank-owned commercial properties that are a great deal. Just make sure that you do your research and don’t rush into anything.

CHOOSING A BANK-OWNED COMMERCIAL PROPERTY

In selecting a bank-owned commercial property for purchase, it is important to note these helpful tips.

Scout the location

Take the time to visit the commercial real estate, observe it, and answer a few questions like:

• Do you see a lot of traffic in the area?
• Are nearby businesses thriving or failing?
• Is the commercial property located near a community?

Evaluate the property’s opportunities

The current version of a bank-owned commercial property might not serve your investment goals. Some work, however, could improve the property’s value and ability to generate revenue.

Opportunities often look like this:

• Additional land you could use to expand or construct buildings
• Developments that will soon introduce more residents or employees to the area
• Infrastructure improvements that will soon make it easier for people to visit the property
• Low-cost ways to improve the property and make it more attractive to tenants

Get the property inspected

A visual inspection can help you spot potential revenue opportunities. Always get the property inspected by a professional before you invest. Once you have an inspection, you can estimate the money needed to repair and upgrade the commercial property. Add that amount to the property’s cost.

WAYS TO FIND BANK-OWNED COMMERCIAL REAL ESTATE PROPERTIES.

There are a couple of ways to search for bank-owned commercial properties for sale. The most labor-intensive option involves contacting financial institutions in your area and inquiring about any commercial real estate they want to sell. The amount of time and effort that this takes can vary greatly according to your location. The various ways include:

• Contact Banks to get information about Commercial properties they own and visit their websites. 

Many banks have real estate departments that will help you learn more about the properties they have for sale. Try reaching out to institutions like US Bank, Wells Fargo, BMO Harris,  Chase Bank, and Citibank. You should expect it to take some time for you to get information from banks. They want to sell the properties, but it’s not a top priority for them because banks make most of their money from mortgages and other loans. 

Once you get a list of bank-owned commercial properties, you may need to do some extra research to decide which ones interest you. Banks list their properties on their websites. Just type the name of a bank and “REO” into your favorite search engine. Some bank listings will give you a lot of information. Other listings are a bit sparse. 

• Attend and Monitor Local Real Estate Auctions to find Bank-Owned Commercial Properties.

If you don’t want to talk to individual banks about the properties they own, you can attend foreclosure auctions in your area. Foreclosure auctions give you a relatively easy way to bid on several bank-owned commercial properties.

Look in your newspaper to find upcoming auctions. Banks always try to auction their REO properties before listing them for sale. Statistics show that most properties at auction are never bid on. Because of this, auctions are a good way to identify commercial properties that are soon to be on the market.

While real estate and foreclosure auctions have benefits, they also present some challenges. You will not have an opportunity to inspect the property before you bid. You have to make a decision based on information provided by the auctioneer. Ideally, the bank will give accurate information that helps you make a good decision. You may get some unwanted surprises, though, when you visit the property you purchased.

A foreclosure auction may also require all-cash payments. Banks have already been through the foreclosure process once with the property, so they don’t want to do it again. If you don’t have the capital to outbid other investors, then you probably won’t have the option to buy the properties that interest you most.

• Identify the type of Commercial Property you want.

There are many types of commercial property, and you’ll have an easier time searching if you narrow down what you are looking for. Online listings of bank-owned commercial properties give you the easiest way to explore investment opportunities. An updated database will show the most recent commercial real estate for sale in your area. You can filter the listings to focus on the ones currently owned by banks.:

You also get other benefits from browsing properties on an online database. You can focus your search on specific types of commercial real estate, including:

• Retail buildings
• Office buildings
• Warehouses
• Hotels
• Apartment buildings
• Industrial sites
• Mixed-use buildings (which can house both office space and apartments).

You can also learn details about each property’s characteristics.

By using an online commercial real estate database, you save time and get more of the information you need to choose a property that fits your investment needs.

• Work with a Real Estate Broker. 

An experienced commercial broker can find listings that are otherwise hidden from you. Find a broker by looking in your phonebook or asking another investor who they used when buying commercial real estate.

As a professional who is licensed to buy, sell and lease properties for business purposes, it’s entirely possible that the right broker may know of some attractive properties in some stage of distress. It is their job to know what’s going on in their neighborhood, and it’s reasonable to assume they’ll know more about the distressed properties in a given area than anyone else. Make sure whichever broker you hire has experience with commercial properties.

• Visiting Commercial Investing Websites

There are a number of sites dedicated to identifying commercial real estate properties for sale, both distressed and non-distressed. Most commercial investing websites will allow visitors to filter their searches with a number of criteria, not the least of which include distressed labels. 

These websites have listings for bank-owned commercial properties around the U.S. an example is visiting a popular site like LoopNet, a marketplace where many people go to start their own commercial property search. The listings will state the size, price, and type of commercial property, such as street retail, office building, residential, and more.

• Networking

Running a successful investing business is synonymous with an effective networking strategy, and investing in distressed commercial properties is no different. Real estate is, after all, a people business. Staying connected with a multitude of real estate industry professionals throughout your career will increase your odds of landing investing opportunities.

CONCLUSION

Bank-owned commercial properties have proven they belong in a savvy investor’s portfolio; one that’s prepared to take the right steps to acquire them. Finding bank-owned commercial properties for sale is a skill every investor should at least consider honing.

 

As informed investors we should understand the risks associated with real estate investing and that there is no guarantee. Please do your due diligence.