We talk about residential investing a lot here, but there is more than one way to reach financial freedom. Commercial real estate investing is another way to get involved. Commercial real estate is the ownership of retail stores, office buildings, or warehouses and storage facilities. Let’s dive right into commercial real estate investing.
Is commercial real estate difficult to get into?
Seemingly, some investors think that commercial real estate investing is trickier to get into than residential. “Anything is possible, that’s what I’ve learned in this business,” Said Emma Diaz, Vice President of Locate Commercial Real Estate. “There is no certain type of person who can invest in commercial real estate. Anyone can get involved if they want to.” Selling and leasing commercial real estate is her main focus.
What are the different types of commercial real estate?
In residential real estate, there are different types of real estate investment strategies that you can choose from. The same goes for commercial. So, what are the different kinds of strategies that you can invest in? Let’s take a look.
“Land is a limited resource,” Diaz explained. “If it’s purchased in the right area at the right time, it can have a high return [on investment].” You’ll want to look for land that is in the path of a future development site.
Investing in commercial land is attractive to some investors because it is less time-consuming. Land may be a cheaper path up front, but there are still expenses. You will have to pay property taxes as you hold onto the land until you’re ready to sell or develop.
Industrial or warehouse
“The industrial market is kind of on the up-and-up right now,” Said Diaz. Warehouse space is necessary with the expansion of Amazon and other big retailers. If you’re looking to build a space, industrial may be the way to go. It’s easier to build-to-spec, a general build not meant for any entity in particular, for an industrial or warehouse space.
Retail space can be for restaurants, shops, gyms, salons, and any other goods and services company. “The retail is evolving as of recent. Former spaces are being transformed into open-concept retail space.” Diaz said. The Des Moines area is rapidly growing and transforming, especially in the retail sector. Entertainment is high on the list of development companies.
Mixed-use is a flexible term that describes a building that can contain multiple different businesses. There can be restaurants and shops on the first floor, and office space on the second, or vice versa. There are endless possibilities for a mixed-use building.
Office commercial real estate is exactly what it sounds like. Buildings that have intended office space with little to no retail or warehouse space. These may take the form of a single-story building, or have multiple stories and a huge parking area.
How do you get involved in commercial real estate investing?
Commercial real estate can seem riskier and pricier than residential. You’ll need a commercial loan for a higher dollar amount. “Everything is negotiable and anything is possible. Nothing is set in stone.” Diaz vocalized.
She continued on to explain that you can form partnerships with other investors, get into Real Estate Investment Trusts (REITs), go into construction or development projects. The list goes on.
How do you go about managing your commercial real estate space?
Leasing a commercial property is definitely different from leasing a residential property. You may have multiple tenants in your space, or you may be occupying the building yourself with your team. Either way, hiring a property management company to handle the many maintenance requests, rent collections, and finding suitable tenants for you may be the best plan of attack.