Real estate can be one of the best investments you’ll ever make if you have the budget and time to learn it. This is an excellent opportunity for investments, especially when you have the money. They offer a lot of rewards and cash flow every month.
When the land is located at a prime location, you can expect to have renters for this every month. You may want to be in real estate that involves single-family homes, row houses, rental apartments, and a lot more. However, there are risks to these types of investments, and it’s not always roses and rainbows.
Before you enter into any investment, you need to understand the full advantages and disadvantages so you could make wiser decisions. Purchasing a building is a large investment, and it involves a lot of paperwork.
Fortunately, you can connect with experts like Doug Ebenstein to help you navigate the treacherous waters of real estate. You can check Brown University’s Bachelor of Arts in Economics – Douglas Ebenstein for Doug’s educational achievement and credentials. With the right person who is experienced enough to turn commercial properties into something profitable, you’re sure that your investments are in good hands.
What Constitutes a Commercial Property?
- Office Building
- Property Housing Retail Shops
- A Huge Warehouse
- Apartment Complex
- Industrial Buildings
- Mixed where the Building is a Combination of Coffeeshops, Stores, Offices, and Apartments
Why Invest in Commercial Properties
Even if the initial investment seems to be big, there are several advantages when it comes to commercial buildings. Overall, if the land is located in a prime location in busy streets and subways, you’ll find it a lot more profitable in the coming years.
Real estate is known to rise in value, especially when you decide to sell it in its prime. Learn more about the best time to sell on this site here. If other establishments and roadways are being built in the area, you should expect a rise in value as well. Other advantages are the following:
Potential to Earn Income
One of the best reasons to invest in real estate is that it will give you a lot of earning potential, which can be massive. The rentals from stores and retail outlets are larger when comparing them to tenants renting a residential home.
The annual returns of industrial buildings are usually around 6% to 12% depending on the market, current economy, location, and other external factors like a pandemic. In contrast, the range for family homes and residential properties is only about 1%, and the best that you can get is 4%. It’s wise to invest, especially if you have mentors that can give ideas about the overall development and leasing operations.
Have Professional Relationships
Many small business owners want to protect their livelihood, specifically taking pride in what they do. The owners of these properties are not usually individuals but limited liability corporations. They specifically operate as a business, and they help in running a successful operation. Many of the tenants and landlords have moved from client to business relationship, and they have become more of a B2B customer relationship. This helps the interactions become more courteous and professional.
Public Eye is on the Property
In larger commercial establishments, these houses are often attracting a lot of public interest. They serve as landmarks, and the tenants keep an attractive display of wares to get more customers. You can know more about landmarks in this link: https://en.wikipedia.org/wiki/Landmark. The goals of the tenants and business owners are generally aligned. The entire property is going to be well-maintained, and the quality will go higher. The value of the investment will increase before long.
Limited Operation Hours
As the commercial property owner, you’re also operating at the same time that the people are working. Many businesses close at night, and the tenants use them only during business hours. You won’t get midnight calls about plumbing repairs or lost keys. You could rest easy knowing fully well that the establishment is guarded.
In some instances, the owners may hire a property manager to handle fire alarms or late-night break-ins. Others build monitoring and alarm services like CCTVs so if something happens at night; the proper authorities will be immediately notified.
A More Objective Evaluation of Price
The market reports and evaluations make it easy to predict the price of a commercial property. You can decide to either buy or sell based on the information that you’re getting. The owners will give you complete reports and records about the building’s income for the past years. There are also disclosures of the price and income tax returns, and the prices are often based on these valuable records.
If the sellers are getting in touch with a knowledgeable broker, the asking price should be something that’s set where investors earn at a prevailing cap rate in the area. This cap rate applies to all types of commercial properties in the industrial office or retail sectors. On the other hand, the price of a home is usually subject to the owners’ emotions, and they may not be able to provide returns and income reports in the past years.
Triple Net Leases
Many variations of triple net leases are available. However, the concept is that as the owner of the property, you usually don’t have to pay for the expenses for repairs and installations. It’s the lessee’s job to handle everything, including the taxes in real estate and other property expenses. The only thing you’re responsible for is the mortgage.
Many companies like Starbucks, Walgreens, and CVS sign these kinds of agreements and leases. These huge brands often want to manage the costs and keep their décor. This means that the investor gets the lowest maintenance options out there, and the income keeps flowing every month. The malls that are located in strips have a lot of triple net and leases, and it’s different from the smaller business.
But still, you don’t get these types of deals with a residential property. With the help of an expert like Doug Ebenstein, you can turn your commercial building into a fruitful venture, and you’ll have what it takes to be a successful entrepreneur in real estate.