If you have decided toinvest in Commercial real estate, one of the first questions to ask yourselfwould be – what type of commercial property to invest in?
With various types ofCommercial real estate properties, it can be challenging to narrow down on thesingle best example of investment.
So, how do you decidewhat’s the best type of commercial real estate property? Ask around for answersfrom your friends and family? Sure, yes. But will it always be the mostreliable?
Not really.
What worked out for yourold uncle Sam 20 years ago might not work out for you today. Similarly what mayhave worked out for your friend who stays miles away from where you live mightbe out of the question for you.
Consulting a real estateexpert on commercial real estate property is your best way of doing it if youwant to get it right.
As a matter of fact,there is NO single best type of Commercial property to invest. What’s best forsomeone might not be the best one for you.
It largely depends on howmuch investment you want to make and how much time you wish to spend on thisactively. Also, what is your primary agenda behind investing and what is yourrisk-taking ability and so on.
Suggestions in this blogbased on the principle of averaging out all other options to invest. But westill recommend hiring an expert to help you make the final call about the besttype of commercial property to invest.
Best Types of Commercial Properties to invest inin the year 2019
Number 1 – Multi-family Properties
Multi-family Propertieswould top the list here. Multi-family Properties are buildings that have morethan four residential units in a single building, making it possible formultiple families to reside.
These make for the bestkinds of Commercial real estate investments because the market here isevergreen with steady hike in the number of people moving into the major citiesof the USA.
An increase in thepopulation and job opportunities indicates that more people are looking forhousing. In case of single-family properties are saturated, people are activelylooking to rent out spaces in multi-family Properties.
You cannot go wrong indeciding on investing in multi-family Properties as long as you don’t choose a placewith the worst location and the neighborhood. What’s more, is that the tenantmix that’s probably going to rent out multi-family units are by largemillennials!
The millennials arealways on a lookout for a space they can rent out at reasonable prices over theold school approach of purchasing a property.
So, if you want to tap onthis market, investing in multi-family properties is a great start which inmost cases brings you a stable and lucrative rental income.
On the downside, however,is the high maintenance charges that are required to operate multi-familyproperties.
With more than 5-6tenants living in, as an owner, you will be needed to deal with everythingthat’s creating trouble in your apartment. Now, many investors who intend to investin commercial properties may not be interested in taking the pain of dealingwith every problem, big or small, going to happen to it.
This is especially truefor savvy investors who have a portfolio of real estate investments across theStates.
The good news thatthere’s a smart fix to this issue, at a small price. Hiring an asset managementcompany to manage your multi-family property can save you the pain and timeneeded to deal with the maintenance of multi-family properties.
Asset management companiesoffer full maintenance of these properties – right from fixing the toiletissues that occurred at an odd hour, to talking to tenants about the problemsand concerns they’re facing at the apartment and collecting rents from everytenant on time.
So if you’re looking tomake some serious money from commercial real estate investing, multi-familyproperties is without any doubt a great option!
Number 2 – Self-storage units
Next up on the list wouldbe self-storage spaces. These spaces which are rented out to people who want tostore their stock, commodities, or just about anything.
These are great spaces toput money into because they do not fluctuate as much according to the changingeconomic status of the country.
People will always needextra spaces to store, and so, these can never go out of trend. The best partabout self-storage spaces is that it doesn’t require any maintenance – noworrying about the clogged toilets, or redoing the paint or trimming the plantsin the garden (yes, we’re referring to multi-family properties).
The only thing you willneed to do when one tenant decides to move out is to sweep out the stuff, andput an ad to find your next new tenant.
The downside, however, isthe competition.
If you find a competitorclose to your space, you’ll never know when your tenants are thinking aboutmoving into your competitors’ area, which can often force you to bring yourrent rates down. But other than that, self-storage buildings are quite a safelow-risk kind of commercial real estate investment.
Number 3 – Shopping malls
Shopping malls are alsoone of the best types of Commercial real estate investments. The best partabout investing in shopping malls is that they are easily manageable and arestellar stable!
You might find difficultyin procuring rent from the residential tenants who live in your multi-familyproperty, but that’s rarely the case with your tenants in shopping malls.
The big reason behindthis is that your tenants here are business owners and they’re often moreprompt and professional in their dealings and almost always, pay rent on time.
On the same lines, ifyour commercial space tenants have a concern in the mall – for example, thelift is out of maintenance, they will write an email to you or call you tobring the notice to light. The last thing they would do is to write a negativereview on your page.
Renting out Commercialbusiness spaces to business owners is thus very stable and less of a headacheon many fronts. On the downside, though – the changes in the state’s economycan have an enormous impact on your earnings.
An unexpected doom in themarketplace might force a majority of your business tenants out, and you’ll berunning a vacant shopping mall until you’ve found your next bunch of newerbusiness tenants.
The location of theproperty is the most crucial factor that decides if or not investing in ashopping mall property makes sense to you.
Number 4 – Co-working spaces
Co-working spaces are thenewest addition to the list of best Commercial real estate investmentproperties. With an increase in the number of people choosing to work remotelyor freelance, co-working spaces are in high demand, especially in metropolitancities.
The per square foot ratesfor co-working spaces beat every other kind of commercial office spacesproperties, and you cannot get this wrong if you chose the location and theneighborhood wisely.
Maintenance of co-workingspaces shouldn’t be much of a headache as you’ll find convenient and efficientasset management companies to look after it . Striking off the maintenancepart, everything else about co-working spaces is lovely.
One – you don’t run outon tenants as there’s an increasing demand for such spaces amongst the remoteand freelance workers. Two – all the perks of shopping malls can be enjoyedhere too as your potential tenants are again people who run small to mediumbusinesses.
Bottom-line: A sweet mixof multi-family properties and shopping malls is what co-working spaces are. Soyou’ll get to reap the benefits of both multi-family properties and shoppingmalls if you invest in Co-working spaces.
Number 5 – Mobile home parks
Last up on the list wouldbe mobile home parks. These make for a tremendous commercial real estateinvestment for as long as tenants own their homes.
These are low maintenanceand a little landscaping now and then is just about everything you’ll need todo to have the cash flowing in.
As these are taken by homeowners themselves, most of the maintenance will be completed by owners, and they generally pay their rent on time too! These type of Commercial real estate investment may not be one of the most lucrative ones, but a safe-and-stable one for sure.
These are our top 5 kindsof commercial real estate investment types. Check out our blog section toexplore more on the latest trends in Commercial real estate markets. If you’relooking for commercial real estate loans to finance your investment, we’d loveto respond to your queries and provide you the best mortgage that’ll perfectyour needs. Talk to our team today!
