If it will, at commercial real estate investments, investors often know what type of real estate, you should invest in this article, about 5 groups of buildings and the reasons why you should or should not be considered.
1. Land: people who invest in waste places, often in the hope of buying farmland adjacent commercial land to a few thousand dollars per hectare. Dream of their fate is again in the near future for commercial value zonesHundreds of thousands of dollars or more per hectare. They often try to convince people to invest in undeveloped land, sell the dream. Even if this dream is really happening, as you can hit the jackpot in Las Vegas, the reality is, most investors lose money or get the return on the investment real estate. This is a very risky investment that generates no land or very little income. Regarding the taxes, the country is not so reduced that you can not claim any depreciation. Additionally, for theLand loan interest is also very stiff in comparison to other types of commercial real estate. So every month, you must pay the money for the mortgage to be found, while reaping none. Should invest in land which
- Develop expertise so that you can not convert the land treated in a shopping center.
- You know exactly what you are doing and their deep pockets.
- The ownership of the land of a shopping center, you (not the owner of the building).
2. Apartments: it is a management --intensive investments that the turnover rate is high. The leases are often short in one year from month to month. As a tenant in and out, you have to spend money to get ready for the device. Apartment tenants tend to be a history of delays in the other tenants have because they are more likely to have a limited budget. If you do not like dealing with a headache most of the tenants, you probably want to stay away from the apartments. The key to success is the apartment investmentto
- Control or reduce costs. This may appear a trivial task, the list of expenditures by the property manager. These expenses include: advertising, accounting, banking fees (because of insufficient funds), capital improvements, corner of Grant laundry, cleaning, costs of collection, garbage collection, insurance, il, Landscape Architecture Legal (expulsion) the cost, maintenance, asset management , Property Management Off-site On-site pest control, painting, repairs, sweeping, security,Property taxes, utilities and water.
- Investment in real estate only in a good position, no deferred maintenance.
- Stay away from areas where tenants, for example, Berkeley, Los Angeles.
Otherwise, you can finally afford a little money or even negative cash flow. If any of your investment goals is to be achieved high levels of cash flow to the fingers of the apartments. In California, if you have an apartment of 16 or more units have a manager on site. This increasesnew expenditures. In general, the apartments are easy to acquire and more difficult to sell. There are always many of them in each market. The apartments is that they tend to achieve high employment rates as everyone needs a roof over their heads. So the interest rate for apartments is usually ¼ - ½ per cent less than other commercial properties.
3. Special features: They are for a particular company, such as restaurants, gas stations andHotel / Motel.
- Restaurants: Some investors like to invest in fast-food brands such as Burger King, Pizza Hut, Jack in the Box, KFC. These are single-tenant properties with long-term absolute triple-net lease, which often have no responsibility for the management of the owner. However, the rental income or capitalization of these restaurants are located is often less than 5-7%. Emerging regional chain restaurants like Johnny Carino's, Backyard Burger, Zaxby or TiaSouthwestern tend to higher prices of the CAP in the range of 7-8.5% interest. However, if you do not return a deeper insight into the budget for a profit. Operators of restaurants for sale real estate investors a higher rate of CAP and lease back the property for 20 years. Turn off the proceeds of the transaction with the construction of the restaurant expanded. So if you are willing to accept higher risks, you will be rewarded for the high-income emerging market with these restaurants.
- Petrol station:When buying a gas station to both homes and gas stations to buy. Most gas stations have convenience stores and auto repair bays at times. The profit margin for gas is at 10-20 cents per gallon [fixed many customers mistakenly blame the high prices for gas station operators for the innocent], but is quite high for a store. This is required as a residential property that you are eligible for a loan stand-by with a minimum deposit of 10%. If youI was not the intention to participate in the management of the service station, auto repair and convenience, you can stay out as gas stations is a chemical that could contaminate the soil. Once a loss occurs and contaminates the environment, it takes years and cleaned a lot of money on the ground. You may also be responsible for damages by the owners of adjacent properties, such as the contamination in May spread to their property. It is almost impossible to sell your property, because the lenders do not wantBuyers borrowed money to buy it.
- Hotel / Motel: After buying a hotel / motel, a property and buy 24 hours a day, 365 days a year of its existence. This activity requires hard work and marketing capabilities to reach the various parts. The rooms are useless if they are free. Companies tend to seasonal and can be immediately affected by an economic downturn and political events, for Example 9-11. Many of these properties are owned by Indian surname Patel, as they seem to workdifficult and we know that.
4. Offices: These properties are single-or multi-storey buildings. The older of the two-story office building with no elevators tend to have difficulty in finding tenants on the upper floor, as a service-May disabled customers who can not climb stairs.
- Single-rent properties are used as the headquarters of large companies like Cisco. These tall buildings are usually sensitive toEconomy. Once free, it is difficult to find a replacement tenant.
- Multi-tenant building of these properties are leased by small businesses, for example, real estate, tax accounting. Investors who want to buy these properties in order to diversify their investment risk more widely. If a tenant terminates the drive, so a small percentage of the lost rental income.
- The tenant is of high quality: Most of them have good credit, very active and quickly pay the rent in arrears.
- Lease: The lease agreements for officeWorks range from full-service [landlords pay property tax, insurance, maintenance and utilities] on nnn [property taxes provide tenants] insurance, maintenance and utilities. The lease NNN is a litmus test of whether the office building located in a strong demand by tenants or not.
- Medical Buildings: These properties are leased primarily by doctors and dentists. A high-quality medical building should be in advance or in front of a hospital. This makes it easier for physicians toback and forth between the hospital and their offices. Some investors prefer medical tenant medical buildings are evidence of a recession.
5. Shopping / Rate Centers: These centers are usually on one floor and a number of varieties can tenants: space for the school and retail services, restaurants, doctors, and even the Church. Therefore, it is the most popular type of commercial property sought by investors. Are always asked a lot, because there are more buyers and fewSellers.
- Multi-Tenant Strip: The advantage of this investment, if a tenant goes, you lose only a fraction of total income while you are on the lookout for a new tenant. Then spread the risk for this object.
- Single-tenant building has the advantage that only with the tenant to work. Some tenants such as Costco, Home Deport, Walmart, CVS Pharmacy 10-20 to sign a one-year lease and could be the guarantee of their corporate assets, the billions of dollars.This makes your investment is very safe.
- The tenant is of high quality: Most of them have good credit, very active and quickly pay the rent in arrears. Often signs long-term leases of 5-30 years, so that we do not do to make the search for new tenants every year. Keep spending your property in good condition and even money to make it more attractive to attract customers in the shops.
- Triple Net (NNN) lease: lease shopping centers are often in favor of theOwner. Tenants pay a monthly fee and reimburse the landlord for the property tax, insurance, maintenance, and sometimes even the cost of property management for. This eliminates the risk much more like an investor. The lease is NNN is a kind of litmus paper to test whether the property is not in high demand by tenants or.
- Lease on the ground, sometimes even a shopping mall with a leasing land is for sale. If you buy this center, we have only improved, but not landbelow. Could a trophy property, but we think three times on investments. When the lease expires and the land owner refuses to renew the lease you do not! It is easy to buy the center, but very difficult to sell.
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