moved to your current house, is a lot of work.  You can find evidence of this if you catch up with friends you haven’t seen since before the pandemic.  If they own an investment property, they will regale you with stories of all the work and hassles that arose in connection to their investment property, from repairs your friends had to make even if the damage could have been avoided had the tenants been more cautious to the financial struggles brought on by the eviction moratorium.  Investing in commercial real estate has a much higher return on investment, but it is also so much work that it is impossible for commercial real estate investing to be a mom-and-pop operation, and the financial risks are much greater.  Meeting with a Birmingham real estate lawyer is a great first step for those who wish to get started investing in commercial real estate.

Why Doesn’t an Apartment Building Count as Residential Real Estate?

The legal definition of commercial real estate is somewhat different from what you might expect.  As you can probably guess, commercial real estate includes retail spaces, industrial buildings, and land designated for development for those purposes.  What might surprise you is that buying certain residential structures also counts as commercial real estate investing.  The residential real estate laws apply when you buy a single-family home, townhouse, individual condominium unit, or residential structure with up to four housing units, such as a duplex or quadruplex.  If you buy a residential building with five housing units or more, it counts as commercial real estate.  Commercial buildings, whether they are apartment complexes, malls, parking garages, or any other kind of structure, are so expensive that only huge companies can afford to buy a whole building.  Therefore, big buildings are often divided into “parcels” (such as X number of parking spaces or X number of stores in a mall) for purposes of real estate sales.

Commercial Real Estate Agents

The role of real estate agents is similar for residential and commercial sales in that they help buyers find appropriate properties, help sellers find buyers, and give the parties information about the financial considerations involved with the transaction.  You have probably seen advertisements for certification courses saying that it is easy to get a real estate license and get started on a lucrative new career.  These are only for residential real estate.  To become a commercial real estate agent, you must have a bachelor’s degree in finance or a related field before you start studying for your real estate licensing exam.  The laws and tax codes about commercial real estate are so complex that you need years of background knowledge to navigate them successfully.

Dealing With Commercial Real Estate Taxes

If you think the property taxes on your home are steep, commercial real estate taxes can be astronomical.  There are many ways to reduce your tax burden legally when you invest in commercial real estate, and a real estate lawyer can help you choose the best one.

Let Us Help You Today

A real estate lawyer can help you with the big decisions involved in investing in commercial real estate.  Contact Cloud Willis & Ellis for a consultation on your case.