3 Ways To Invest Successfully in Commercial Real Estate
Getting into real estate can be a complicated and time-consuming process, but it doesn’t have to be as complex as you may think. Commercial real estate in particular offers many avenues into the industry, with different advantages to suit several different types of goals. Whether you want a more hands-on approach or you’d rather give more responsibility to your tenants, there’s a commercial opportunity for you. Here are three ways you can successfully invest in this unique area of real estate.
If you’re looking to get into the industry but are unsure about all the responsibility, you may want to look into triple net leases. With this type of lease, you can require your tenants to be responsible for various areas of property upkeep, like real estate taxes and property insurance. You can even require that they handle all repairs and maintenance needs, though you may want to check in and make sure they’re being done properly. If you own offices or warehouse space, this can be a great opportunity to draw in business clients. Keep in mind that these can be long-term leases, and if you lock your rent rate but the area market increases, you could be missing out on a larger profit.
Hotels that are run well in a great location can bring in a huge profit, but to manage this feat usually requires either luck or experience, and many times it takes both. If you’re new to commercial real estate, you may find this area to be a difficult place for a beginner. Not only does it require attaining the property, but also running the hotel. Hotel management is a specific business area, and without the right experience, you could be out of a lot of money. If you do decide to purchase, you can hire someone else to manage the business side for you.
If you like the idea of triple net leases for longer terms, you may be more interested in retail centers. Taxes tend to go up over time, and with gradual increases in rent, you are likely to see an increase in profits throughout the life of the lease. Just like in real estate, there are many different types of businesses, so you can add to your portfolio with a variety of retail stores and their different property needs.
Commercial real estate has many opportunities for beginners and the experienced investors alike. With so many different areas, every investor should be able to find a niche that is just as fulfilling as it is profitable.