Historically, real estate has been a way for people to invest their money. Purchasing land or buildings and maintaining them, renting or leasing them to other businesses has proven to be a lucrative endeavor. There are benefits to investing in commercial real estate.
Pros To Investing in Commercial Real Estate
There are lots of benefits to investing in commercial real estate. In terms of increasing the property value, it very much depends on how much money is coming in from your tenants. The amount of money it is earning is directly related to its value as a property. There are factors that sway this equation. If, for instance, you own a retail property, you’d want it to be located adjacent to an anchor store, with a recognizable name and symbol, to increase foot traffic to the property that you own.
As Stefan Soloviev might contemplate, when it comes to drawing in businesses to occupy your commercial buildings, you get what you pay for. If you’re looking to lease out office space, for instance, the more high-end features your building offers will determine what kind of tenants you have. They will pay premium prices for the most up-to-date features dealing with comfort, safety and performance.
Commercial leases are generally longer than residential rentals. While residential rentals usually are measured in months, commercial leases are often measured in years. This means that your tenants will be locked in and guarantee you cash flow for longer periods.
When dealing with business entities, you’re leasing to an entity with a plan and money set aside, as part of that plan, for housing. Renting residential property is a bit dicier, though, because you’re involving yourself with somebody’s personal finances, which can be more volatile than that of a business.
Triple net leases are another selling point of commercial real estate investment. They benefit commercial investors because, in this lease, the tenant absorbs property expenses such as maintenance, building insurance and real estate taxes. The property owner simply pays the mortgage.
The tenants in commercial properties are going to act differently than those in residential properties, and, again, this comes down to a difference between the professional and the personal. Professionally, folks generally lace themselves up to perform their jobs, keep their spaces clean and keep their eye on the bottom line. With residential properties, though, a landlord might be subjected to tenants who struggle to keep up established norms when it comes to things like maintaining their space and paying the rent on time.