If you’re handy or you have connections with certain builders or contractors, you may have an advantage if you’re considering buying and flipping commercial real estate. If you know how to make improvements and quickly raise the curb appeal of townhouses, condominiums or apartments, buying and selling commercial property can be a lucrative business, especially if you can cut down on the length of time you own a property.
If you’re only intending to own a property for a couple of months while you make improvements, do you really need to secure a title insurance policy? In today’s blog, we explain why title insurance is typically a wise investment even if you’re not planning on holding a property for very long.
Title Insurance For Commercial Flippers
One of the best things about an owner’s title insurance policy is that a one-time payment provides you with insurance protection for as long as you own the property. For many people, this means decades of coverage for one simple payment. Because of this, it may seem like commercial title insurance is a better investment if you’re planning on owning a property for an extended period of time, but that’s not entirely true.
When it comes to title insurance, it doesn’t really matter how long you hold the policy if you never need to make a claim. Having 30 years of peace of mind is great, but you’ll really be thankful that you have a policy if someone makes a claim on your property. And when it comes to commercial investing, it is much more likely that there will be title issues with properties that are appealing for flippers. Your fixer-uppers, your foreclosed properties and your “sold-as-in” auctions are much more likely to have potential title issues than a newly built apartment complex that you’d otherwise invest in.
Because of this, it is typically a smart move to secure a title insurance policy even if you don’t intend on holding the property for too long. These foreclosed, downtrodden or dilapidated properties that are prime for a little TLC are more likely to have:
Another main reason why title insurance is important for commercial investors is because there is a lot of money at stake. If you forgo commercial title insurance and someone makes a valid claim on your property, you may have to pay significant court costs to settle the matter in court only to find out that someone else actually owns the property you thought was yours. Forgoing title insurance can be a 6-, 7- or even an 8-figure mistake depending on the size of your commercial investment, and it’s simply not worth the risk. You’ve worked hard to improve your financial freedom, so don’t risk having it all wiped out because you assumed there were no issues with a property.
Fixer uppers can be appealing to flippers, but they generally have more title issues, so don’t rush into a project only to find out you’ve made a costly mistake. Sync up with a firm like Commercial Partners who can thoroughly research a property and get you set up with the perfect title insurance policy that suits your individual needs.
For more information, or to bring us aboard to help with your next commercial project, reach out to our team today at (612) 337-2470.