There are many real estate investors who prefer to invest in commercial properties over residential. This is because these types of properties can provide numerous opportunities for income, as well as for appreciation.
Prior to investing in commercial and industrial buildings for income, there are several important criteria to consider. First, just as with any type other of real estate purchase, location is always a primary factor. In this case, the building should be close enough to residential areas that business tenants will want to lease, and that their employees will want to work there.
In addition, you should also consider the convenience of the location in terms of other surrounding business buildings. For example, are there shops, restaurants, and other operating businesses within a close proximity? If there are, then the potential marketability of the building will likely be increased.
Those who are shopping for commercial or industrial properties will also need to consider the price per square foot as compared to other similar buildings that are located within the same area. Working with a realtor who specializes in commercial buildings can be a big help in working the numbers here.
Another big consideration that will help to increase the investment value of the building – and in turn likely increase the amount of rent that can be charged – is the number of positive amenities that the building has.
For example, are there any elevators in the building, or are tenants required to walk up several flights of stairs to get to the upper floors. Is the building ADA accessible for those who are handicapped, or will it require major renovations in order to get it up to compliance? Does the building have features such as a kitchen or break area for employees? Any of these additional features can all increase the marketability of the overall property.
When financing a commercial or industrial building, investors will typically be required to have at least 20 to 25 percent of the purchase price as a down payment at closing. This, however, will help in keeping the monthly mortgage amount lower – in turn, helping to improve positive incoming cash flow.
Having a property manager to assist you with the day to day management of tenants can also be of help. This is especially the case if you do not have the time available to devote to your property investments. For more information on how you can reap the benefits of your real estate investments by working with a property manager, contact us.
