With trends such as the use of smart building technology where it creates systems that have high levels of security and overall enjoyable tenant experiences, more and more people are looking into commercial real estate investing. If you still need convincing, then here are some of its common benefits:
- Greater Potential Income – Commercial properties are known for having a higher return on investment compared to residential properties. They have an average of 6 to 8%. They also offer lower vacancy risk, which means that they do not have to worry about available units or spaces because a tenant would more or less occupy it. Commercial leases also last longer than residential ones, so there are fewer tenant turnovers.
- Continuous Cash Flow – There would always be a consistent stream of income for commercial leases. This is often seen in tenants who pay monthly rents. Also, commercial properties have more spaces which result in you achieving economies of scale and obtaining more profit quickly. There are cases called triple net lease where tenants are also the ones responsible for paying the building’s property insurance, taxes, and maintenance expenses.
- Long-Term Leases – As previously mentioned, the benefit of commercial properties is that they have profitable leasing contracts. Compared to residential leases, these agreements can last up to several years. Thus, ensuring more cash flow and returns for the commercial investor.
What are commercial real estate investing strategies you could use?
You need to remember that although real estate is a very great investment, you also need to be careful when investing. You need to avoid making costly mistakes, and this can be done by first knowing what kind of commercial real estate strategies you should use.
- Make use of industrial properties for redevelopment. It’s important to think before buying a property. For instance, you might have found a neighborhood that has a potential for economic resurgence in the future. You can purchase an industrial real estate there and decide on how to proceed. If you are thinking of it as a short-term goal, then you can find commercial tenants for your building. But for a long-term goal, you can have your property rezoned for redevelopment. You can build it into a retail or even a residential property.
- Renovate apartment buildings. You can do this by looking for an apartment in places that have strong economic growth and a steady population. Through renovation, you can improve the living standard for tenants, increase rental rates, and in turn, get more cash flow. Moreover, renovating actually increases the value of the property too.
- Look for raw land that has potential. It’s all about finding an area where, although it still doesn’t have much of a development, it has the potential to grow in the future. You can get all the necessary permits for construction at the site. This adds value to your commercial real estate investing. You can further choose the said land for entitlement so you can get profit from someone else who wants to develop it.
Commercial properties are filled with benefits, and if you want to be successful in your real estate investment endeavors, it is always best to get the help of experts. They provide services that include enhancing property values through hands-on management and targeted investments. They also help you obtain only the best income-producing assets at discounts to replacement costs. For your commercial real estate investing, they can assure you that they are the right choice for the job.