When most people talk about real estate investments, they mostly talk about single-family residential investments while almost completely ignoring commercial real estate investors. Commercial property investing represents a large percentage of the industry and represents great earning potential for those who know what they are doing. Residential investing can be profitable, don’t get me wrong, but it is time consuming and doesn’t offer the same flexibility as commercial real estate.
Reality shows and endless stories about quick bucks from home remodeling have brought residential property investing to the forefront of public attention. But if you’re ready to avoid the amateur masses and make the leap to the “pros,” then you need to step up and join the ranks of commercial real estate investors.
Commercial property is so broad that it encompasses a wide variety of property types and increases the diversity of your portfolio. Office, retail, industrial, multi-family, and mixed-use properties are all commercial investment categories. Properties such as retirement homes, hotels, motels, and even storage facilities are also considered commercial real estate. So you can see how the possibilities are virtually endless when it comes to what type of property you can own in the business investment industry. Given the nature of many of these types of properties, commercial real estate investors can spread their risk over many tenants. In residential real estate, if your tenant is absent or decides now is a good time to try being a meth cook in the garage, he’s out of luck. You will continue to owe money for expenses while you fight them. On the other hand, if one of your retail mall tenants breaks their lease, you’re better off because the others are still there and providing you with income.
Commercial property investors also do better than residential ones because of how commercial properties are valued. Unlike residential, where comparable sales are used to determine the value of your home, commercial real estate is valued based on the income it provides. The monthly net cash flow determines how much your property is worth. Therefore, all you have to do is increase revenue or decrease costs and you will automatically increase the value of your property.
Investing in property in general is a great way to earn a living. If you shop right and set up a good system, you can sit down to check the mail for your checks. However, specifically, investing in commercial properties offers many advantages over residential ones. If you have questions or need guidance, we are here to help. TheRealWealthBlog is run by professional commercial property investors, so sign up for our updates and let us guide you to profitability.
