When most people discuss real estate investment they are primarily discussing single family residential investments while almost completely ignoring commercial real estate investors. Commercial property investment accounts for a huge percentage of the industry and represents huge profit potentials for those who know what they are doing. Residential investment can be profitable, don’t get me wrong, but it is time intensive and does not offer the same flexibility that commercial real estate does.
Reality TV and endless stories about the quick money made in flipping houses has brought residential property investment to the forefront of the public’s attention. But if you’re ready to avoid the amateur masses and make the leap to the “pros” then you need to step up to the plate and join the ranks of commercial real estate investors.
Commercial property is so broad that it encompasses a wide range of property types and increases your portfolio’s diversity. Office, retail, industrial, multifamily and mixed use properties are all categories of commercial investment. Properties like retirement homes, hotels, motels and even storage facilities are also considered commercial real estate. Thus, you can see how the possibilities are virtually endless when it comes to what kind of property you can own in the commercial investment industry. Given the nature of many of these kinds of properties, commercial real estate investors are able to spread their risk around through many tenants. In residential real estate if your tenant goes AWAL or decides now is a good time to try their hand at being a meth cook in the garage you are out of luck. You will continue to owe money for expenses while you fight it out with them. On the other hand if one of your retail strip mall tenants breaks their lease agreement you are better off because the others are there still providing you with income.
Commercial property investors also make out better than residential ones because of how commercial property is valued. Unlike residential where comparable sales are used to determine your house’s worth commercial real estate is valued at the income it provides. The monthly net cash flow determines how much your property is worth. Thus, all you have to do is increase income or decrease costs and you will automatically increase your property’s value.
Investing in property in general is a great way to make a living. If you buy right and set up a good system you can sit back check the mail for your checks. Specifically though, commercial property investment offers many advantages over residential. If you’re hesitant or need guidance we’re here to help. TheRealWealthBlog is run by professional commercial property investors so sign up for our updates and let us help guide you to profitability!