No one starts to invest in commercial real estate overnight without making prior plans. The investor does extensive research on commercial leasing and triple net leases before making the final decision. It is also important to give the utmost commitment and dedication to the investment process so that you get the desired profits from commercial real estate investing in the end.
It is also vital to remember that commercial real estate where you are investing should be capable of providing high returns. There are various investment options available nowadays, and perhaps considering ROI is the main factor in your investment planning. Hence, if you plan to invest in commercial real estate, what are profitable investment choices in which to choose?
Types of Profitable Commercial Real Estate to Invest
Properties Having Huge Number of Tenants
The properties capable of generating high returns on investment are those that have a good number of tenants. These properties include apartment complexes, RV parks, office buildings, storage facilities, and student housing complexes. The more tenants you have on the property; the more income will be. Similarly, the higher the demand for property, the less you have to worry about finding new tenants quickly.
If you think about investing in commercial real estate, it is very important to find a suitable property with a good number of tenants or huge demand among the tenants.
Properties in The Developing Areas
In this investment field, the commercial real estate located in high-traffic areas is likely to attract tenants more, and they are willing to renew the lease and attract new tenants when the old ones leave the premises. The same principle is true in the case of macro-scale investing. Therefore, the fast-growing areas and demanding neighborhoods are popular among real estate investors.
Properties Having Triple Net Leases
Though properties with several high numbers of tenants indeed have higher returns on investment, the triple net property is the high-ROI exception to this particular rule. These triple net properties are single-tenant spaces, but the tenants sign the long-term lease options. These properties are best for beginners in commercial real estate investing.
The reason is that the NNN leasing tenant has the responsibility to pay the real estate taxes, building insurance, and maintenance throughout the duration of the lease. Therefore, it helps the investors have a stable income source from the investment option rather than estimating the income depending upon maintenance costs.
You should find out the right commercial property for investment in terms of high ROI and profits. Besides, it is also important to choose the right type of leasing that will help you to meet your investing needs.
Also READ: Why are REITs Indispensable in Commercial Real Estate Investments?
What You Need to Know Before Investing in Commercial Properties
Commercial real estate investing is a lucrative investment option as it provides a constant return, passive income, and has growth potential. Commercial real estate is becoming more and more important as an alternative investment option for beginners who want to profit from properties. Though CRE can generate long-term profit, not all of them are equal.
You should know that all the property types are not the same. Commercial real estates have a wide range of assets. They are divided into 5 main sectors- office, multi-family, retail, storage, and medical facilities. Some properties generate more income than the rest. Hence, you should first study the current market value and then start investing.
You should also know the market cycles of these commercial properties. For example, the economy’s health, unemployment rate, and GDP are directly related to the profit generated from CRE. Hence, it is crucial to understand the real estate market cycles and how they work before you start investing.
Are you ready now to invest in commercial properties? Then, choose a trusted company like Wealth BCI, which will guide you throughout CRE investing.