The 5 Best Commercial Real Estate Property Types
Whether it’s a building or piece of land, commercial real estate encompasses many different property types. It is important for potential investors to consider what they plan to use the property for, along with the benefits and profitability of investing in the different types, when deciding which one is the best investment for them. These five property types typically deliver the greatest advantages and investment opportunities.
Retail shopping centers can house several types of stores, including grocery stores, restaurants, nail salons, banks, big box retailers and department stores. Triple net leases are common in this type of property investment, and they often benefit the investor. In this kind of lease, the tenant is responsible for paying rent, real estate taxes, maintenance and repairs, and property insurance. Many times, the tenant agrees to increases in rent as part of the lease terms. This means the gradual increase of expenses and taxes for the investor will often be offset by higher rent payments, and the rates of return are likely to improve.
Previously developed and undeveloped land can be a highly profitable commercial real estate property type, but it is one to take on slowly and carefully. Learning the land development process before getting in too deep is a smart approach when it comes to this property type. Investors can opt for taking over vacant land in a city, vacant land formerly used in commercial or industrial industries, or completely undeveloped land.
Apartment buildings, big and small, are popular with investors – and for good reason. They are usually great moneymakers, and loans for apartments are often easier to come by because banks view them as a good investment. In addition, they are plentiful. Apartments are available in many different locations.
Like apartments, hotels and resorts come in a wide range of types and sizes. From full service to extended stay, they can be a good investment for an investor who has some experience. However, people who invest in this kind of property often choose to lease to another company that will actually run the business. This way, the investor has someone who is more experienced in hotel operations in charge of the day-to-day aspects.
Offices and warehouses can also be promising investments. They vary in size, location and quality of construction, but overall, they are usually a good investment. Like retail properties, triple net leases are often characteristic of this property type, which is usually an advantage for the investor.
With many options available, researching the best commercial real estate property type for an investor’s specific needs is wise. Long-term profitability and benefits for the investor are important considerations when looking at different property types, and they will often lead to solid investment decisions.