Investing in commercial property can help you diversify your portfolio and increase your bottom line. However, with so many options to choose from you may be wondering what type of investment is best for you. Here are a handful of popular commercial investments to consider when trying to make up your mind.
Retail buildings can be anything from a large strip or shopping mall to one single building that can house an independent business. There are no constraints on who can rent out a retail space and little limitation on what they’re used for, for example as dance or fitness studios, restaurants, bars and insurance offices.
You can still achieve a diverse portfolio on single-use retail properties however; in fact some cities have retail shops on the street level with apartment spaces available above. This carries you the extra benefit of being able to collect more rent per square foot by owning a multi-purpose space.
Industrial buildings can include anything from small warehouses to large manufacturing plants and often include a large amount of workspace or storage in addition to one or several small offices. One of the key advantages of owning a large industrial building is you can probably charge a higher rent and the property is multi-functional, bringing you a more diverse portfolio.
The downside is the building can be difficult to rent if it’s not in an area that has a high demand for that kind of space.
Apartment Buildings And Multi-Faceted Homes
This is probably one of the most popular type of investments, because multi-family homes and apartment buildings offer a wide variety of choice. You can begin by purchasing a small building with only a few units available for rent. Once you’re established, you can invest in larger multi-unit buildings or developments to increase the amount of rental income you generate each month.
Before you consider larger building purchases, make sure you calculate all the overhead and operating costs involved, including maintenance and repair costs, upkeep fees and property taxes.
This type of commercial property can serve as a great investment because corporate renters often stay in their premises for a long time and are more likely to pay rent on time.
Office buildings are classified by their construction and location. A “Class A” building would be deemed highly desirable when location and construction are factored in, whereas a “Class C” building would be considered less desirable because of its age and location.
There are some office buildings that have a design that can accommodate multiple businesses and others are a little less flexible when it comes to floor plan.
Prices vary tremendously based on factors such as the building’s class rating, square footage, location, access to nearby amenities. These issues will affect how difficult or easy it is to rent out space in a commercial office building, so be careful to assess all aspects of your purchase before you buy.
Large investor groups tend to back hotels with every shareholder having a personal stake in the business’s fortune. If you are interested in investing in this type of commercial property, you must be comfortable with not being hands on with the daily running operations of the business. Your role is more of a source of funding who gets paid dividends when the hotel is performing well.
If being hands-on is more your preference, it may be worth considering looking into speciality, boutique or extended-stay hotels that have an independent owner rather than an international brand attached to it
This can be particularly profitable if you can purchase some multi-unit vacation rental properties.