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Profit From Commercial Real Estate Investments

Sep 23, 2007
Lately there has been a change in the real estate investment scenario. There is greater interest nowadays for making investments in commercial property than in residential property. The returns are considerably higher and there is the additional benefit of tax incentives also. As compared to residential property, one big advantage of commercial real estate is freedom from maintenance. In most cases, the responsibility of maintenance and upkeep of commercial real estate property is on the tenant whereas in residential properties the onus of maintenance lies on the landlord. This relieves the owner of much of the rigors and expenses as well.

Normally commercial property lets are long term and it is not uncommon to find the contract periods going up to ten years or beyond which ensures long term secure cash flow. Another advantage is that there is a lesser chance of rental default on the part of a commercial property tenant. However, one must exercise due caution, and thoroughly research and examine all related aspects before going in for the actual investment. Business and industrial property, medical centers, malls, hotels and retails stores, all fall under the commercial property category.

Commercial properties are geared to generate rental income and/or capital gains through value appreciation. People prefer to invest in multi family units and apartments these days. The advantage is that they offer management and financing similar to residential property, which makes them easy to handle. A large number of people invest in mobile home parks. This is all the more beneficial if the land belongs to you and still better if you happen to sell the mobile homes yourself.

If you have land of your own, you can set up self-storage units, which people take on rent to store many of their possessions. Another favored option is to invest in retail properties. These properties are multi tenant properties and are used by retailers for their business transactions. Central business district offices, suburban garden offices, suburban high-rise offices and medical offices are other commercial real estate options to explore. People are setting up health care units consisting of assisted living centers and nursing homes as profit making ventures. Oil change facilities and gas stations are another favored option.

Real estate research has proven that in the year 2004, the price of different types of commercial property rose by six to twenty six percent. Even though it may be more profitable, commercial property investment and management is more complex than other types of real estate investment. Evaluating commercial property is much more difficult and is based on very different considerations. It is advisable to act only after having made a thorough study of the market trends and even then proceed with caution.

Commercial property yields better monthly cash flow and has better rentals that any residential property in the same locality. The rentals would actually depend on the nature of business that would be conducted there. Investments made in commercial real estate can be compared to investments in stocks and bonds in terms of the returns they offer. Commercial real estate is usable in business or trade and is tradable in the real estate market.

As new investment capital is flowing in continuously from people seeking higher returns from large investments along with improvement in the economy and growth in business ventures, there has been a revival of investment in commercial real estate.
About the Author
Real Estate Investing is made easy with Real Net USA. Our four step program of find, fund fix and sell, is your blueprint to Real Estate Investment success. Discover how you can profit at http://www.realnetusa.com.
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