There are several steps and criteria an investor needs to closely examine before making a commercial real estate purchase. As with any investment, proper research and examination are imperative to success.
Buy Commercial Real Estate – Overview
An overview is necessary when getting into the business of purchasing commercial real estate. Understanding the types of properties and their general characteristics will give confidence in the right choice for each investor. So what are “commercial” real estate investments? Commercial property includes rentals such as office buildings, shopping centers, apartment complexes, industrial parks, etc., while residential property would be more commonly known as single-family homes or condos to most people.
Each location can have a different value, and each property type will have a different set of risks/rewards associated with its usage. Generally, investment in commercial real estate is seen as a long-term choice since the properties are not usually built to be sold again after only several years. This is unlike residential real estate, which often requires smaller loan amounts and shorter terms before you can sell it.
Commercial properties offer larger potential rewards and a greater risk than single-family residences. A good knowledge base of how these properties function and what they entail will go a long way to understanding what you’re getting into when investing in this sector
Types
Generally speaking, there are three major types of commercial real estate: office, retail and industrial. Each has its characteristics, and investors should get to know them to find the one that suits them best. When investing or buying a property, it is important to treat it as a business and consider its usage before choosing it.
Office buildings are usually built specifically for companies and people who work in offices. They are, of course, used by many other types of businesses, but this type of real estate is designed with certain features of office space in mind. You would want to buy an office building if you rented out space for professional use, especially if it requires large square footage. Perhaps you were planning on opening up your own business that needed office space.
Office buildings are built for businesses focused on office activity, and those who need to rent space from these kinds of properties should be as well. Retail properties can come in a variety of different forms, such as strip malls, shopping centers, or standalone stores. This type of real estate is especially attractive for investors because it has the ability to earn money without too much day-to-day interaction. A strip mall can have many individual businesses renting out parts of it, and each business is responsible for their own success, and often only they directly experience its rewards. Shopping centers offer multiple location opportunities, and standalone retail stores give you more control over the property but also require more upkeep than other Buy Commercial Real Estate.