Investing in Commercial Real Estate
This is a variation of the rental property where you invest in an office, retail or warehouse / storage property. It follows the same general pattern. You buy a property and rent it to tenants, who pay you the mortgage and hopefully make a profit.
Investing in residential property rentals on residential property is usually more complicated and expensive than investing in commercial property.
So why invest in commercial real estate?
Well, the principle of risk vs. reward determines that trading features are more profitable. Not knowing how to invest in property, especially at the commercial level, can be a very expensive learning tool.
For someone who has experience and investment, real estate investing in real estate is a real estate asset because of the extraordinary benefits.
In addition, commercial real estate usually includes long-term leases. Since the property is being rented out to a business, they want a multiyear lease. This will ensure the continuity of their business.
The lease can easily be 10 years or more. Cash flow will be more stable as you do not change tenants every year or two.
Property appreciation may also be more general than that of residents. This is especially true if the property is generating huge annual profits. This is likely to happen with commercial property, as the tenant often pays for the maintenance of the building in addition to the monthly rent.
Leases can also be set up to give the landlord a percentage of the business’s profit.
On the downside, commercial property is often subject to the business era. During a recession, business income decreases, and your tenant may have difficulty paying rent.
The tenant can also go out of business, leaving you with a vacant building. Since commercial tenants come in all kinds and sizes, it may take months or years for you to find a new tenant for your property.
Investment in commercial real estate is for the more experienced investors who are more risk tolerant. This is a real high risk / high reward investment.