When it comes to want to know commercial real estate investment, investors often should the types of properties they invest in. This article describes superior to white, about 5 groups of properties and the reasons why you should or not, they think.
1. Plot: The people who buy raw land investing too much hope for the agricultural land in the vicinity of commercial land to a few thousand dollars per hectare. They dream their fate is again to commercial in the near future, it is worth ZonesHundreds of thousands of dollars or more an acre. People to convince you to invest in, undeveloped land often try to, if you sell that dream. During this dream actually happens, as it is possible to hit the jackpot in Las Vegas, the reality is most investors lose money or something back in the land investment. It is a very risky investment as the country creates either no or very little income. From the perspective of the income tax does not land, not losing value, so that you are not entitled to depreciation. In addition, theInterest rate loans, land is very steep compared to other types of commercial real estate. So every month, you should come with the money for the mortgage to pay, when compiling any. You should consider investing in the country, if you
- Develop know-how to transform raw land so that you could in a shopping mall.
- Know exactly what you are doing and have deep pockets.
- Separate the country is a shopping center (not the owner of the building).
2. Apartments: This is a management --intensive investment as a turn around is high. The leases are often short-term after one year from month to month. As a tenant in and out would be, you have to spend money to get ready for the device. Apartment tenants have generally higher payment history as the other tenants, as they often have a tighter budget. If you do not like the headaches dealing with many tenants, you will probably want to stay away from homes. The key to successful apartment investmentto
- Control or reduce costs. That may sound trivial, until you see the cost of property manager's list. These expenses include: advertising, accounting, banking fees (for lack of funds), capital improvement subsidy coin laundry, cleaning, collection fees, garbage collection, insurance, landscaping, legal (eviction) fees, maintenance, offsite property management, property management on site, pest control, painting, repairs, sweeping, security,Property taxes, utilities and water.
- Only in the properties you invest in a good location with no deferred maintenance.
- Stay away from areas with tenants, such as Berkeley, Los Angeles.
Otherwise you might end up get some cash flow or even negative cash flow. If any of your objectives is to maintain high cash flow, you can keep from dwellings. In California, if you are a 16 or more units of housing, you must have a manager on site. This increases theCosts further. In general, the apartments are easy to buy and sell harder to find. There is always a lot of them are over the markets. The advantage is that they are about the apartments, often by high occupancy rates as everyone needs a roof over their heads. Because of this, the interest rate for apartments is often ¼ - to ½ per cent lower than other commercial properties.
3. Special features: These features are designed for a specific company, and as restaurants, gas stations andHotels / motels.
- Restaurants: Some investors find in brand-name fast food restaurant such as Burger King, Pizza Hut, Jack in the Box, KFC to invest. These are single-tenant properties with long term absolute triple-net lease, which often require no management responsibilities of the landlord. However, the rental income or Cap Rate for these restaurants is often lower in the range of 5-7%. Emerging regional brand name restaurants like Johnny Carino's, Backyard Burger, Zaxby's, or TiaSouthwestern cap rate tends to increase in the 7-8.5% range to offer. However, if you deeper into the financial statements so they can for a profit. The restaurant operator to sell the real estate market for investors higher cap rate and lease back the property for 20 years. They in turn use the proceeds of their business by building more restaurants expand. So if you are willing to accept higher risks, you will be rewarded with high incomes in these emerging restaurants.
- Gas Stations:if you have a gas station, you buy real estate and the gas station business. Most gas stations have convenience stores and sometimes several repair bays. The profit margin for gas is at 10-20 cents per gallon [captured many people wrongly blame the high gas prices on the innocent gas station operators], but it is quite high for Convenience Store. This is called an owner-occupied homes, you qualify for a SBA loan with a 10% deposit is required. If youThere are no plans to operate the gas station, auto repair and convenience store business commitment, you can stay away from service stations as gasoline is a chemical that could contaminate the soil. If a leak occurs and contaminates the environment, it takes years and lots of money to rehabilitate the soil. They may also be liable to the damage by the owners of adjacent properties as contamination can spread to their properties. It is almost impossible to sell your property because lenders do not want toLoan from the buyer the money to buy it.
- Hotels / Motels: Once you buy a hotel / motel, you buy the property and a 24-hour-a-day 365-days-a-year business. This business requires hard work and marketing skills to fill the spaces. The rooms are worthless if they are free. The company tends to be seasonal and can be immediately affected by the economic downturn and political events, such as 9-11. Many of these properties are of Indians, with the last name Patel property, as they seem to workharder and know the business well.
4. Office buildings: these properties are single-or multi-storey buildings. The older two-story office building with no elevators tend to have trouble finding tenants upstairs have as many service companies can have, physically-challenged customers who are not walking up the stairs.
- Single-tenant buildings: the properties are used as the corporate headquarters of major corporations such as Cisco. These large buildings are generally sensitive tothe economy. Once free, it is hard to find a replacement tenant.
- Multi-tenant building of these properties are leased by small businesses such as real estate, tax accountants. Investors who wish to acquire these properties to spread the investment risks. A unit where a tenant eviction, you lose only a small percentage of rental income.
- High Quality Tenant: most of them have good credit, a lot of wealth and punctual payment of rent when due.
- Lease: The lease agreements for officeBuildings are full-service [owner to pay property tax, insurance, maintenance and utilities] on NNN [tenants pay property tax, insurance, maintenance and utilities]. The NNN lease is a litmus test of whether the office building is not in high demand by tenants or.
- Medical Buildings: the properties are leased primarily by doctors and dentists. A good medical building was before or on the opposite side of the street are from a hospital. This makes it easier for physicians toBack and forth between the hospital and their offices. Some investors prefer to medical institutions for medical tenants are very recession proof.
5. Shopping / Retail Centers: These centers are usually single-storey and wide variety of tenants: space for retail and service companies, restaurants, medical, school and church. As a result, which is the most popular type of commercial real estate that investors seek. You are always in high demand because there are more buyers and fewSellers.
- Multi-Tenant Strip: The advantage of this investment, if a tenant moves out, you lose only a portion of total income while you are on the lookout for a new tenant. To spread the risks in that capacity.
- Single-tenant building is the advantage you need to work only with one tenant. Some of the tenants, such as Costco, Home Deport, Walmart, CVS Pharmacy sign 10-20 years lease and guarantee with their company's assets that could be worth billions of dollars.This makes your investment very safe.
- High Quality Tenant: most of them have good credit, a lot of wealth and punctual payment of rent when due. Often signs long-term leases 5-30 years such you need not worry about finding new tenants every year. You keep your property in good condition and sometimes even spend their own money to make it look better, in order to lure customers into the stores.
- Triple Net (NNN) Leases: The leases for the retail centers are often in favor of theLandlord. The tenants pay a base rent and reimburse the landlord for the property tax, insurance, maintenance, and sometimes even property management fees. This takes a lot of risks that you as an investor. The NNN lease in a sense, is the litmus test of whether the property is not in high demand by tenants or.
- Ground Lease: occasionally a retail center with a leasehold property is for sale. If you use this center to buy only the improvement of their own, but not the landunderneath. It could be a trophy property, but you should think three times to invest. As soon as the ground lease expires and the property owner refuses to renew the lease, you own nothing! So it is easy to buy this center, but very difficult to sell.
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