Commercial Real Estate 101
admin / September 9, 2020
Many people are interested in breaking into commercial real estate, but they have no idea where to begin. These basics of the industry will give you a better idea of how it works, what the major benefits are, and how you can begin investing.
What Is Commercial Real Estate?
Very simply, commercial real estate properties are designed to make the investor money. More often than not, this means that the owner of the property will rent the space to a tenant; the tenant then pays rent, which becomes the owner’s income.
Commercial real estate is incredibly broad in scope; it can include offices, industrial spaces, retail buildings, hotels, housing, and more. The only real requirement for a commercial property is that it generates some form of income for the owner.
How Does Investing in Commercial Real Estate Work?
Any time someone invests in commercial real estate, they are hoping to make a considerable return on investment (ROI). As the property appreciates, it becomes more attractive to future investors and allows the current owner to charge tenants more in rent. Higher rent means greater immediate income, so appreciation is something that property owners can capitalize on right away. When and if an owner should choose to sell the property, appreciation will prove incredibly valuable.
What Are the Benefits of Commercial Real Estate?
There are many reasons to get involved with commercial real estate, but some of the most appealing benefits of the industry include:
- Increased income: Commercial properties are known to have a better return on investment. Because they have longer leases, these properties experience less tenant turnover which makes the income stream steadier.
- Cash flow: For the most part, commercial property tenants will pay for the building’s maintenance, real estate taxes, and property insurance. This greatly reduces the owner’s overhead costs on the property.
- Less competition: Investing in commercial property is generally seen as more difficult than other types of investing, so this space is often less saturated, which makes it easier to purchase high-quality properties.
- Longer leases: Compared to residential properties, commercial properties tend to have longer lease agreements which boosts both income and cash flow so owners can enjoy less lease turnover.
How Can Laverty Chacón Assist You with Your Commercial Real Estate Investments?
At Laverty Chacón , we understand our client’s goals, so we work to stabilize cash flow, gain a solid ROI, and minimize the time and cost required to maintain your investment properties.
We treat each of our clients’ properties as if they are our own, offering exceptional customer service, cost control, bookkeeping, and reporting services for all investors. To learn more about the basics of commercial real estate, our property management services, or to get started on your own investment journey, call us today at 916-722-0333.
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