Often when people invest in raw land they hope that that land will one day be re-zoned to commercially-zoned land in the future, which would turn that meager investment into one that is worth hundreds of thousands of dollars or more per acre. In reality, the chances of this actually happening are low. In most cases, people how invest in raw, undeveloped land either lose money or get little return from their investment. So if you’re considering investing in land you should either know how to develop the land so you could actually convert the raw land into a commercial property yourself or invest in the land of a property that is already home to a commercial property, though you wouldn’t actually own the buildings in that case.
Investing in an apartment property is a management intensive investment because the turnover rate of apartments is high. Often the longest lease for an apartment is one year, with others for six months or month to month. This means that tenants of your commercial property investment are moving in and out, causing you to spend money on repairs and improvements in between tenants. If you’re planning on investing in an apartment complex and making a successful profit you should be able to control or minimize your expenses. These expenses can include advertising, accounting, bank fees, capital improvement, cleaning, collection fees, garbage disposal, insurance, landscaping, maintenance, repairs, security, property taxes, utilities and offsite and onsite property management. As an investor, you should also steer clear of apartment complexes in areas with rent control. If you are looking to invest in an apartment complex, an upside is that apartments tend to have high occupancy rates, so you won’t have to worry about lack of tenants. Also, investing in an apartment complex is an easy way to watch an asset single handedly generates thousands, even hundreds of thousands of dollars in a very short amount of time.
Office building investors have the potential to gain significant profits. If you’re planning on investing in an office building you can do this by having tenants sign long term leases of three years or more, which is fairly common practice in office buildings. For the most part, investing in an office building is similar to investing in an apartment complex, with the exception that office buildings are more service intensive because the owner has to pay for electricity, cleaning services and repairs. An investment in an office building heavily relies on the economy. When the economy is enjoying growth and success, so are businesses. Therefore, with a better economy comes an increased demand for office space, meaning lower vacancy, higher rent, and greater net income. However when the economy suffers, so do office building owners, due to lease cancelations making rents lower and also lower income.
Retail centers are the area of commercial real estate that has and continues to make a strong financial profit for investors. Investing in a retail or shopping center is a great way to improve your financial future because they appeal to a wide variety of businesses. If you are looking to invest in a retail center you should first consider the location. The future business and clients of your commercial real estate investment highly relies on the location, therefore it’s important to choose a location that is of high visibility and accessibility. Also, consider what type of businesses you would want to occupy your retail center because the success of your investment relies on this. Consider aspects such as convenience and parking. Owning a retail center can be easier on you also because there is less tenant abuse.