Commercial real estate investing can be one of the most lucrative ways to invest your money, but without a solid understanding of what the industry really entails, it can be difficult to break into this industry and feel comfortable with investing in it.
With that in mind, here are a few of the most common questions that novice commercial real estate investors often ask:
- What exactly is commercial real estate? Honestly, it’s a completely legitimate question! The definition of a commercial property is often confusing simply because it spans across so many industries and can include everything from office buildings to hotels. In general, a commercial property is one that provides a place for businesses to operate, while residential properties typically refer to houses (i.e., where people live).
- What are the advantages of commercial real estate investing? Compared to residential properties, many people say that buying commercial real estate provides a better return on investment (ROI) and provides a sort of security over the long term, since commercial leases typically last longer than residential ones. Another advantage is that it’s easier to maintain a reasonable work schedule; the property owner can delegate smaller tasks to the businesses using the space, and there tend to be fewer late-night emergencies than with residential properties.
- What are the disadvantages of commercial real estate investing? Most people say that the biggest disadvantage is the risk involved with commercial property investing; the climate changes quickly and property values won’t stay constant forever. Others say that regional regulations are another hurdle for commercial investments, because states and cities create their own rules for the types of businesses that can operate in certain areas.
- Who typically invests in commercial real estate? This industry is pretty great because it’s something nearly anyone can do — either as a full-time career or as a part-time activity. Many people choose to invest in commercial properties because it gives them an opportunity to network with other professionals.
- What’s commercial real estate financing all about? Commercial real estate loans are great ways to get a jumpstart on investments, and with about 35 lenders offering CMBS (commercial mortgage-backed securities), there are plenty of ways to finance your properties safely and securely.
In fact, even though the global economy has been a bit shaky recently, economists say that U.S. markets are expected to see their healthiest year in 2015 ever since the economy collapsed in 2008. So, is commercial real estate investing the right choice for you?