CINCINNATI, OHIO / ACCESSWIRE / March 2, 2022 / Joe Fairless says that a solid investment opportunity can be found in any sort of property, whether commercial or residential. However, commercial real estate often gives more financial benefits than residential real estate investments.
Examples of Commercial Property
Commercial real estate comes in a range of forms, including:
- Retail buildings
- Office buildings
- Industrial buildings
- Fulfillment Centers
- Mixed-use structures
Reasons to Invest in Commercial Real Estate
Here are a few advantages of purchasing commercial real estate versus residential real estate.
Joe Fairless explains that the biggest incentive to invest in business rentals rather than residential rentals is the possibility for profit. Depending on the geography, the present economy, and external circumstances, commercial buildings generally have an annual return on investment of 6 percent to 12 percent (such as a pandemic). That's a significantly wider range than is typical for single-family residences (1 percent to 4 percent at best).
Retail tenants have a strong interest in keeping their store and storefronts in good repair since it will harm their business if they don't. As a consequence, the interests of commercial tenants and property owners are aligned, allowing the owner to maintain and increase the property's quality, and hence the value of their investment.
Long-Term Professional Relationships
Business owners are often proud of their establishments and wish to safeguard their livelihood, Joe Fairless goes on to say that Commercial property owners are often limited liability companies (LLCs) who run the property as a company. As a result, the landlord and renter have a more business-to-business customer connection, which aids in maintaining professional and courteous relationships.
Fewer Hours of Operation
At night, most businesses close up shop. To put it another way, we work when they do. Except for emergency calls for break-ins or fire alarms late at night, being able to sleep soundly without fear of getting a late-night contact from a commercial renter who needs repairs or has misplaced a key. Commercial properties are also more likely to have an alarm monitoring service, which means that if something happens late at night, the alarm provider will contact the appropriate authorities.
Commercial property prices are frequently easier to assess than residential property prices, since requesting the existing owner's income statement and establishing what the price should be based on it. If the seller is working with an experienced broker, Joe Fairless says that the asking price should be set at a level where an investor can earn the area's current cap rate for the sort of commercial property they are considering (retail, office, industrial, and so forth). Residential homes are frequently subject to higher emotive pricing than commercial properties.
Triple Net Leases
Triple net leases come in a variety of forms, but the core principle is that, as the property owner, are not responsible for any of the property's expenditures (as would be the case with residential real estate). All property expenditures, including real estate taxes, are handled entirely by the lessee. Having to worry about a mortgage. Larger chain outlets generally sign these sorts of leases because they want to preserve their brand's look and feel, so they handle the expenses, which means, as an investor, receiving one of the lowest-maintenance revenue providers for the money. Strip malls provide a range of net leases, including triple nets, which are uncommon for smaller companies, but are ideal for strip malls and are not available with residential properties.
Flexible Lease Terms
Commercial leases are governed by fewer consumer protection regulations than residential leases, which are governed by dozens of state legislation such as security deposit restrictions and termination requirements.
As we can see, commercial real estate carries a significant number of benefits from an investment standpoint. Commercial assets deserve a place in any savvy investors' portfolio.
Best Real Estate Investing Advice Ever Show
Joe Fairless is the founder of Best Real Estate Investing Advice Ever Show. It includes daily interviews with successful real estate professionals who can provide the insight you need. The popular show recently announced the top 12 episodes of 2021. The podcast allows experienced real estate investor Joe Fairless is co-host of the fluff-free podcast that shoots straight to the heart of the industry truths. As the longest-running daily real estate investing podcast in the world, Best Ever Real Estate Investing Podcast has many episodes to choose from for helpful advice and expert perspectives. The podcast has created more than 1,300 episodes. All podcast episodes are given by professionals providing opinions and first-hand experiences. They are considered for informational purposes only, and all investors should do their own research before making any financial moves. Best Real Estate Investing Advice Ever Show podcast is a valuable tool for professionals who want to learn from some of the best in the game.
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