Commercial Property Types – Which Ones Meet YOUR Needs?

October 18, 2009

Commercial Real Estate

It is important to choose the type of commercial property, or type, that best matches your particular needs and interests.    The list below describes advantages and disadvantages of the various types of commercial investments:

1) Apartment Building Investments: These are the most popular asset types and will be used to familiarize you with all the key skills you need to know to ’talk the talk’ and ’walk the walk’ of other millionaire investors. These are great commercial real estate investments because they’re easy to find, banks love to lend on them, and they’re great cash flow generators. It is recommended you invest in at least one apartment building before you consider investing in any of the other commercial asset types.

2) Retail Centers Investments:  Retail centers (also called shopping centers or malls) are great commercial property asset types for commercial real estate investing. These properties are leased out on a long-term triple net lease basis, where the tenants pay for all of commercial property the expenses. What does this mean for you as a commercial real estate investor?  Your rates of return won’t go down over time as the taxes and expenses go up. As a matter of fact, as rents go up over time, your returns just keep getting better and better.

3) Office Building Investments & Warehouse Investments: This type of investing can’t be beat for passive income generation. A triple net leases are the norm, which means the tenants pay for their rent and maintenance/repairs, property insurance, and real estate taxes. After the tenants pay for all of the expenses and you pay the mortgage, the rest goes into your pocket.

4) Hotel Investments & Resort Investments: This investment type is not for the beginner commercial real estate investor.  However, experienced commercial real estate investors find this type of asset to be fun and highly profitable to own. It’s highly recommended that, as an investor, you do not attempt to operate this type of investment property.  Rather, just invest in the hotel or resort, then lease it to another company, usually a hospitality group or a management company, to operate it.

5) Land Development Investments: This is one of the most exciting types of commercial real estate investing, when the timing is right! It can also be an area that will teach you some quick and painful lessons if you jump into it without know what you’re doing. You will find that by taking some land that isn’t fit for building, and taking it through the approval process, you can dramatically increase the value of the land, as well as your profit. Starting small allows you to get comfortable with the land development process before tackling the more challenging investments, which might require the investor to raise millions of dollars.

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