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Property investors have
now turned their attention towards the lucrative deals presented by the
commercial properties. This sudden interest is the result of the option
to diversify your property investment portfolio, along with a high
income and tax breaks. However, it is advisable to conduct a research
before taking the plunge.
Commercial properties include hotels, malls, medical centers, retail
stores, business and industrial property. These are operated for a
profit from rental income or capital gain. Some common commercial
property types are:
-Apartments and multi
family units: These are the first choice of investors. Apartment
financing and manage- |
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ment is very similar to that of residential
properties. - Mobile home parks: These can be a profitable investment
option especially if you own the land and sell the mobile homes. -
Retail properties: More than one tenant occupies the premises and it is
utilized for retail transactions. - Offices: This category includes
suburban garden offices, suburban high-rise offices, medical offices and
central business district offices. - Mixed use properties: These
properties are a combination of all the above property types. - Health
care units: They include assisted living centers and congregate care
centers and nursing homes. - Hotels: The properties are categorized as
either limited service or full service. - Industrial premises: These
properties can be used solely for industrial purposes. - Self-storage
units: The consumers use them for personal storage or for lease. - Other
specialties: These include oil change facilities and gas stations.
According to a reputed New York based real estate research firm, the
price of apartment complexes rose by 26%, retail properties by 14%,
industrial properties by 21% and office buildings by 6%, in 2004.
Commercial property investment is very profitable but it is a complex
business, as compared to investment in residential properties. There are
number of factors that affect the property evaluation of commercial
premises. It pays to study the market and tread cautiously. Boom in
commercial real estate property:
Commercial real estate includes, but is not limited to, properties used
for educational, medical, commercial or industrial purpose. The
properties are usable in business or trade and can be sold or bought in
the real estate market. The improvement in the economy and growth in
business ventures are responsible for the revival of commercial real
estate. Another important reason has been the continuous flow of new
investment capital. This capital is sourced from people who seek higher
returns from large investments. The areas that come under the category
of 'commercially profitable' carry a higher evaluation, as compared to
other properties in developing areas. The rates for commercial real
estate properties are calculated differently from the method adopted for
residential properties.
The rental yields are better for commercial properties and the monthly
cash flow is more than that of residential property investment, in the
same area. The quoted expectation of returns depends on the kind of
business that would be transacted on the premises. The profit from
commercial real estate investments is definitely much higher than profit
generated from investments in residential properties. Investment in
commercial real estate is as lucrative as investments in stocks and
bonds.
by Joseph Kenny |
