Stabilization is an important term for real estate investors, and while many know what the term means, a surprising number are unaware of the ways in which stabilization can affect their income. Full Force Funding is a California-based lender that provides financing for a variety of investment opportunities, including stabilizations.
In real estate, stabilization is the point at which a property has been fully renovated and leased as per the original business plan. In other words, real estate investors utilize stabilization as an important metric. It basically dictates the return they will receive on their investments once they complete all the work on the property. It is most commonly utilized in commercial real estate investing – and more specifically, in multifamily housing or multi-unit office space – to help investors understand what kind of income they can expect in the long term.
Real estate investing is different for everyone. Some investors choose low-risk fix-and-flip projects, but others get involved with massive community building ventures. Of all these different investment styles, the greatest profit can usually be realized with stabilization. In short, an investor who wants to capitalize on stabilization will buy an older, run-down, or long-vacant property for less than the actual market value, completely renovate that property, and then lease it out to families or companies. The ones who can do this successfully are some of the most successful investors in the industry.
Stabilization is important to understand as it directly affects risk versus return. Many experienced investors will only buy properties after they have been stabilized. Buying a well-maintained property that is already occupied with tenants comes with little risk in most situations, and that means a lesser reward in terms of revenue. With stabilization projects, the risk is far greater since the investor must first repair and renovate the property, then find tenants to occupy the units before any real profitability can occur. However, the potential for profitability is much higher.
Many real estate investors find it difficult to obtain stabilization project funding from traditional lenders such as banks and finance companies. Because of the inherent risk involved in such an investment, these lenders simply avoid stabilization funding in favor of safer ventures. Full Force Funding is a financing company comprised of real estate experts that focuses solely on partnering with real estate investors to help them achieve their financial goals. Unlike traditional lenders, they have the ability to analyze a potential deal and provide funding where it is warranted – even for the biggest stabilization projects.
To learn more about Full Force Funding and their wide variety of commercial stabilization loans, visit their website today. You can also contact the team at…