Best Type of Commercial Property to Invest In | Private Capital Investors (2024)

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!

Best Type of Commercial Property to Invest In | Private Capital Investors (2024)


Best Type of Commercial Property to Invest In | Private Capital Investors? ›

Apartments, or Multifamily Developments

What type of commercial property is most profitable? ›

Properties that are capable of bringing in the highest return on investments are typically those with the highest number of tenants. These commercial real estate properties can include multifamily projects, student housing, office space, self storage facilities, and mixed use buildings.

Which type of commercial property is best? ›

For example, residential vehicle parks and storage facilities offer high returns. Both allow many tenants but lack the infrastructure and maintenance requirements of a large apartment building. Some types of retail and industrial real estate can also produce great returns.

What type of property makes the most money? ›

Commercial properties are considered one of the best types of real estate investments because of their potential for higher cash flow. If you decide to invest in a commercial property, you could enjoy these attractive benefits: Higher-income potential.

What is the most profitable type of real estate investment? ›

Here are the five most profitable real Estate ventures and the key factors and trends contributing to their success.
  1. Residential Real Estate Development. ...
  2. Commercial Real Estate Investment. ...
  3. Real Estate Crowdfunding. ...
  4. Real Estate Technology ( PropTech) ...
  5. Short-Term Rentals and Vacation Properties.
Dec 28, 2023

What is the best lease type for commercial property? ›

Gross leases are most common for commercial properties such as offices and retail space. The tenant pays a single, flat amount that includes rent, taxes, utilities, and insurance.

How do investors make money in commercial real estate? ›

Income is produced through the operation of the building, often through tenants making rental payments, while appreciation is earned through an increase in the property's value over time. Commercial real estate investing normally requires more capital, expertise, and time than many investors have.

What is best use commercial property? ›

In regards to commercial real estate investing, the highest and best use typically means the use with the highest risk-adjusted returns. After examining the potential uses for a property that are both legal, physically possible, and financially feasible, an appraiser will rank them based on risk adjusted returns.

Which type of industrial property offers investors the most flexibility of use? ›

Flex/R&D: These industrial buildings are designed to give its occupants flexibility in the use of the space. Sometimes referred to as flex/tech space, these buildings are an office-industrial hybrid that can have 30% to even 100% office finish.

What is the best commercial tenants to have? ›

The Best Types of Tenants for Commercial Properties

Automotive centers, gas stations, and even restaurants are often selected because they are closest to their customers. So if you have a flat tire, for example, you're going to the nearest mechanic rather than the cheapest or a local favorite.

Which type of property is best for investment? ›

  1. Residential Real Estate. There are numerous rental property types in residential real estate, though the most common is thought to be single-family homes. ...
  2. Commercial Real Estate. ...
  3. Raw Land Investing & New Construction. ...
  4. Real Estate Investment Trusts (REITs) ...
  5. Crowdfunding Platforms.

What asset makes the most millionaires? ›

Real estate investment has long been a cornerstone of financial success, with approximately 90% of millionaires attributing their wealth in part to real estate holdings. In this article, we delve into the reasons why real estate is a preferred vehicle for creating millionaires and how you can leverage its potential.

What is the highest paying type of real estate? ›

Top 10 Highest Paying Real Estate Jobs (Inc Salaries)
  1. Real Estate Investment Consultant. ...
  2. Real Estate Investor. ...
  3. Real Estate Broker. ...
  4. Commercial Real Estate Sales Agent. ...
  5. Real Estate Attorney. ...
  6. Residential Real Estate Sales Agent. ...
  7. Real Estate Developer. ...
  8. Mortgage Loan Officer.
Apr 20, 2024

What type of property has the highest ROI? ›

Investing in a commercial property can offer fantastic tax benefits, low barriers to entry, and some of the highest return rates. Whether it's an investment in a long or short-term property, investors can create positive cash flow with a high return on investment.

Where do the rich invest in real estate? ›

New York, Los Angeles, and London remained the top places with the highest sales in real estate in 2022. While ultra-prime properties, worth $25 million or more, saw higher sales in New York and London. In 2024, the luxury real estate market is expected to improve.

What type of real estate has the best returns? ›

Commercial real estate investments tend to have higher income potential than other types of investments, with the added benefit of longer leases and lower vacancy rates.

How do you generate income from commercial property? ›

Here are six of the best ways investors can make money from commercial buildings:
  1. Buying, Holding, and Selling. ...
  2. Occupancy Charges. ...
  3. Additional Services. ...
  4. Value Addition and Flipping. ...
  5. Advertising. ...
  6. Maximizing Available Tax-Related Benefits.
Sep 1, 2022

Who makes the most in commercial real estate? ›

CBRE Group, Inc., a Fortune 500 and S&P 500 commercial real estate company headquartered in Los Angeles, is the world's biggest commercial real estate services and investment firm (based on 2023 revenue).

What value is most commonly used for commercial property? ›

The sales comparison approach is the most common method for valuing commercial property. This method involves comparing the subject property to similar, recently sold properties in the same market.


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