Commercial real estate has been one of the more significantly successful choices for people to invest their money. It can become an excellent long-term investment where it can provide an ongoing passive income and can guarantee a consistent and constant cash flow when it is done right.
Commercial real estate is defined as any property designed to make money. Compared to residential properties, commercial buildings have higher rents, thus higher potential for returns, too. You can do very well for yourself when you invest in the right commercial property.
Here are some of the commercial real estate options that you can invest in today:
Apartments
One of the most strategic properties to invest in is apartments. This is perfect for investors who want an additional source of income and steady appreciation in the value of their portfolio. It can be a regular source of cash flow that is higher than typical stock dividend yields.
Apartments can appreciate in value faster than other investment types. Its value increases as the property’s net operating income improves through rent increases and more effective asset management. To ensure its growth and retain its value over the long haul, you should maintain your property correctly. Address immediately what you should fix to avoid bigger problems in the future.
Self-Storage
Self-storage facilities have also been an excellent option to invest in commercial real estate today. This has proven to survive even during a recession. This industry has strong records of high returns on investment compared to other asset types. According to Forbes, self-storage is projected to have a compound annual growth rate (CAGR) of 134.79% between 2020 and 2025.
One notable reason why self-storage facilities are best for investment is that there is less maintenance. There are available software programs that can be downloaded and used to help you monitor the day-to-day operations of your property. This software allows you to manage your facility without being on-site and lessen the need to hire a property manager. Check-ins can be done online as well with the help of some self-storage technologies.
Shopping Centers
The retail shopping center is characterized by a single large building or series of smaller buildings that contain customer-facing businesses set up for the purpose of direct-to-consumer retail sales. Retail property is a highly specialized field of real estate development with a unique and complex set of legal, financial, development, management, and marketing variables about which investors and developers must possess sound working knowledge.
Like other commercial real estate types, investing in a retail shopping center also has the potential to give high returns – obviously if it is done correctly. This can prove to be a very stable source of income. Shopping centers can also have lower risks than other investment options. So long as the shopping centers are making money, the investment will continue to soar high.
Office Buildings
Office buildings tend to generate large streams of income. Tenants typically commit to long lease terms and such property appreciates in value over time. This asset type, however, typically comes with the most expenses related to maintenance, rates, insurance, and general fees – which means that the rent rolls generally have to be higher.
There are many factors that should be considered when investing in office buildings – including a need to thoroughly examine the job and economic situation in the area as it defines the need for office space in the area. The vacancy rate is also a factor that needs to be considered. A high vacancy rate in office spaces leads to a decline in rent and increased tenant turnover.
Mobile Home Parks
A mobile home park is a small piece of land rented to residents within the area. Investors usually buy the entire mobile home park and lease each pad to the resident that either rents or owns a mobile home.
Mobile home parks have a lower cost per unit among other real estate asset classes. You can acquire more units for less money. Another advantage of investing in mobile home parks is their typically lower overall costs for repairs and maintenance. It is the owner of the mobile home that is responsible for the repairs and the maintenance. Every investment comes with risks. With mobile home parks, the risk of loss only decreases with more individual units. The demand is always high and thus investing in mobile home parks usually involves a lower-risk decision.
Conclusion
Investing in commercial real estate entails thorough and well-established research before commitment. Apart from the fact that it involves a large amount of money, there are also risks that need to be considered. There are pros and cons to investing in commercial real estate and it really boils down to a matter of what risk you are willing to take.
For More Information, Contact:
John (Adam) Watson, CEO, CanCap Mortgage Group Inc.
Email: adam@cancap.one Tel: 416-452-5281