When you first start looking into investing in real estate chances are that a majority of your literature will revolve around residential real estate. These how-to books and online articles will offer suggestions on how you can get the most bang for your buck, how to manage properties effectively and so on but, they don’t mention what managing residential real estate is actually like. Managing (and investing in) residential real estate takes a special kind of person who is willing to put in a lot of time and money to ensure their properties are well maintained and competitive. If you prefer the actual investment process (and money in your pocket afterwards) then you may want to consider an alternative. We’re not suggesting that you get out of real estate investment. You just might want to buy a different kind of property. Here’s what you need to know about buying commercial property.
Buying Commercial Property on a Budget
Unlike buying residential real estate, buying commercial property is more about the investment process and eventually being able to cash-in on that investment than it is about property and tenant management. With the right investment on the right commercial property you can stand to make significantly more than what you had initially invested. The downside? Buying commercial property takes some serious capital. But,, with the right financial strategy you may be able to avoid the hefty price-tag and still acquire commercial property without having to sell your soul to the bank. Listed below are some advantages to buying commercial property.
1. Easy to Manage
From a cost-perspective, managing residential homes may be cheaper short-term than buying commercial property, but the long-term costs of management add up quickly. When you buy offices or other forms of commercial real estate you typically are able to manage hundreds of units (as opposed to just a few residential units) thanks to the monumental return on investment (ROI) commercial property presents. With simplified onsite maintenance and the ability to hire your own onsite manager you should be able to cut the cost of upkeep and keep more money in your wallet.
2. Cost-Effective
Relatively inexpensive maintenance isn’t the only reason that buying commercial property is so cost effective. A majority of that has to do with how you finance the project. With such a hefty price tag it is highly unlikely that you will be paying for commercial real estate out of pocket (check out our blog on negotiating a commercial lease on a budget). Luckily, there are a variety of ways to finance your property. With extremely lenient commercial loans, group investments and a basic understanding of commercial property valuation (NOI) you should be able to make a substantial sum of money.
If you prefer more of a hands off approach that is more about putting money in your pocket than maintenance, you may want to consider buying commercial property. With enticing options for financing and low maintenance costs, investing in commercial property might finally give you the ROI you’ve been looking for. For further information please check out our commercial properties page that has all of our recent listings or feel free to give us a call at 516-248-6905. We’ll be happy to answer any questions you may have!
