When investing into real estate, commercial real estate is generally a good investment. Like with all real estate investments it has its advantages and disadvantages. The advantages of commercial real estate are long term tenants, limited management, consistent appreciation and return on the investment. Disadvantages of commercial real estate are limited tenants, the available financing and the holding costs of the property between each tenant.
However, there are some important questions you should ask before leasing out your commercial real estate to just anyone.
1. What type of lease they are wanting?
2. What the goals of their business are?
3. Why they chose the location?
4. Why they left their last commercial real estate location?
5. What the credit rating of the business owner and credit rating of their business is?
6. How long has the business been in business?
There are usually two types of leases in which commercial real estate property fall under. Those leases are gross leases and triple net leases. The gross lease the tenant pays the rent and the utilities. The insurance, taxes, maintenance and other bills are paid by the owner of the commercial real estate property. The other type of lease, triple net lease, is where the tenant pays the rent and the utilities along with most every other expense concerning their business and commercial real estate property. When entering into a lease with an individual you are entering into a business partnership because you are becoming a partner within their specific business.
Some of the buildings that are included in commercial real estate property that you may invest in are:
1. Factories
2. Strip malls
3. Industrial buildings
4. Free-standing stores
5. Office buildings
6. Restaurants
7. Gas Stations
8. Mobile home parks
9. Garages
10.Parking lots
When deciding to invest in commercial real estate there is a few important things for you to remember. There is money to be made when investing into commercial real estate. The bigger the building is, the bigger the down payment will have to be. An apartment building with 2-4 units will possibly give you great returns on your investment. And the two most import things for you to remember when investing in commercial real estate or any real estate for that matter is you will need money and patience.
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