A common question among investors is, ‘What are the advantages of commercial real estate investments as compared to other investment options?’
There are several investment platforms available today. The stock market is one of the popular options; however, a number of investors are moving out of that venue because of market volatility and low ROI (return of investment). The platform that offers best opportunities and maximum profit in this volatile economy is a commercial property with high return of investment.
Many who previously believed in investing in the residential real estate market are getting into commercial investment properties, as the current market conditions are creating a good opportunity for making this upward transition.
Investing in commercial real estate is undoubtedly a great idea but before making the final decision, it is very important to know everything about the real estate market, so that you do not make any mistake while investing. Here, we shall discuss about the types of commercial investment properties, the benefits of investing in a commercial property and factors that must be considered before making the final decision.
What are the different types commercial real estate?
When we talk about commercial property, any property that is not residential is categorized under commercial real estate. Properties like office buildings, malls, retail markets, resorts and industrial factories, to name a just a few are some of the commercial estate real estate properties. In simple terms, when you invest money in a property that will be used for commercial purposes, it means you have invested in the commercial real estate. A commercial property is an investment property with returns – this means you can be assured of monetary gains or profits.
Why to invest in the commercial real estate?
Once you invest in a commercial property, you can relax as this is an ultimate key to generate money. Let us have a look, how:
- You can purchase a property and build equity. Keep a watch on the real estate market trends and when you think exiting is a great decision, sell off your property and enjoy the profits. Choosing a commercial property for investment sale is certainly a great choice.
- Secondly, if you want a monthly income, you can rent the property and enjoy the benefits. Your tenants will pay the monthly rental and you can enjoy the profits.
- Thirdly, if you yourself are a businessman, you will not have to pay any monthly rental for an office space. You can successfully run your business from the office space you own and at the same time, you can also build your equity.
- Lastly, if the space you own is more than your personal requirement, you can rent the extra space. By doing so, you can utilize the extra space and also, enjoy the monthly cash flow.
Factors to consider before making the final decision
- Check the location of the property.
- Check the infrastructure of the property and assure that the property is in a good state.
- Estimate the monthly amount that you can expect from the property.
- Calculate the amount that you will have to invest and figure out whether you will be gaining profits or not.
- Consider the future prospects of the property.
When we talk about investments, one of the best choices an individual can make is of investing in commercial real estate. Many people cannot decide whether investing in a residential property is beneficial or they should opt for commercial investment properties. In this blog we shall discuss everything about commercial property and the benefits of investing in a commercial property.
What is a Commercial Property?
To start off with, let us first get an understanding of what a commercial property is. In very simple terms, every other property that does not come under residential property is known as commercial property. These properties include offices, buildings, shopping complexes, hotels and industries, to name but a few. The residential property is for an individual’s personal use while a commercial property is used by more than one person. Whether we talk about commercial property for investment or sale purpose, the choice is always beneficial. However, an investor should always be very careful while investing in the property.
Why Is a Commercial Property a Secure Investment?
Once you decide to invest in a commercial property, you can be assured that you have made a secure investment for yourself.
- One of the biggest advantages of investing in a commercial property is that it is an investment property with returns.
- The money that you spent in buying the property, can be recovered in the form of the monthly rental given by the tenant.
- If the CPI (Consumer Price Index) increases, the commercial lease also increases with it. This means that if there is any increase in your expenses, that amount will be directly added to the monthly rental that is paid by your tenant.
- A huge amount of the operating cost is paid by the tenant through the structure of NNN or NN lease.
- If any changes are made to the property, the tenant bears the expenses.
How to Play Smart While Investing
To make the right choice, it is very important to consider a few factors before making the final decision.
- Always check the infrastructure completely. Do not go only by the outer appearance.
- Estimate the monthly rental that can easily be generated and compare it with the amount you would be spending. Make sure that you are not at a loss by the end of the deal.
- Set up a budget and choose a property within the predetermined budget.
- Make sure that the property is located at an accessible location.
- Study about the area and consider the future prospects of your current investment.