Buying Commercial Real Estate As Investment Property

Investing in commercial real estate is entirely different than buying residential properties. Commercial properties are substantially more expensive and must comply with state and local Real Estate Developer Near Me zoning laws. Property owners must have appropriate permits and insurance prior to leasing space to tenants and include provisions according to the American with Disabilities Act.
Commercial real estate includes a variety of properties such as apartment buildings, condominium complexes, shopping malls, retail outlets, office buildings, industrial parks, and plots of vacant land.
When investors purchase vacant land the property must be inspected and approved before buildings can be erected. Property owners must obtain appropriate building permits through their county’s zoning commission. Investors need to conduct due diligence to ensure properties are zoned for commercial use before submitting a purchase offer.
Investors often join forces with a group of other investors to buy commercial properties or undeveloped parcels of land. Commercial real estate is usually managed by a property management group that oversees maintenance, collects rent, and manages the needs of tenants. The type of property management group required will depend on the use of the property.
Apartment buildings and condominium complexes often have an on-site property manager. Shopping malls and office complexes are often managed off-site through an independent office. When small apartment complexes are purchased some investors utilize the service of a leasing agent.
Investment groups should calculate income to expense ratios to determine the true cost of purchasing commercial properties. Operating expenses can be higher than rental income if investors have low occupancy rates.
Determining operating costs is particularly important when investing in properties that require multiple tenants such as shopping malls, condos and apartment buildings, and business offices. Commercial real estate usually requires a minimum of 50-percent occupancy in order for investors to break even. A�A�
Investing in commercial properties requires knowledge of legal statutes, landlord/tenant laws, and property management. Real How To Calculate Commission Split estate contracts should be executed by lawyers who possess experience in commercial property law and building codes.
Leasing rates for commercial real estate is substantially higher than residential properties. Depending on the area, rental home prices hover around $5 per square foot, while commercial leasing prices can be $10 to $15 per square foot. Prices depend on the type of property, location, and facility use. A�
Buying commercial real estate can offer a higher level of profit than residential properties, but also carries a higher level of risk. Investors must take time to understand all aspects involved and partner with professionals who they can turn to for advice. Otherwise, they place their self at risk for foreclosure, lawsuits, and tenants who default on leasing agreements.A�

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