3 Advantages to Investing in Commercial Real Estate
harkins / August 3, 2016
If you’re considering investing in real estate, your question may be whether you should invest in commercial real estate or residential real estate. While residential real estate can be a good investment, commercial real estate offers several opportunities that should be taken into consideration. Here are three advantages that could make commercial real estate the right choice.
With a residential home, you’re investing in one property but with commercial real estate, you have the opportunity to invest in multiple apartments, mobile park homes, and offices. In fact, you have the ability to invest in hundreds of more units than with residential homes. You also have the ability to hire an onsite manager or maintenance person if you wish which means you won’t have to manage the property personally. Having a live-in maintenance person at the property will allow you to provide support to renters 24 hours a day which will increase your reputation, make the renters happy, and will help to keep the property up to date and in good shape. You also won’t have to hire as many outside contractors. The one you hire may even give you a discount because they’re getting a higher quantity of work and more consistent work.
The true value of a property is found in the net operating income or NOI. To find the NOI, you subtract the property’s operating expenses, excluding debt services, from the gross income. To determine the total value of the property, you can divide the NOI of the property by the cap rate.
Financing for Commercial Real Estate
One of the biggest advantages to investing in commercial real estate is the financing opportunities such as investing with little or no money down through private money partners. Commercial loans are often more lenient and flexible than residential loans. You can also combine financing options such as bank loans and private money.
Once you’ve decided that you want to get involved in real estate investment, you have to decide what type of real estate in which you want to invest. You’ve probably heard that residential homes are a good investment but commercial real estate has some advantages that make it a potentially better investment. If you’re looking into investing in commercial real estate, contact Harkins Commercial Real Estate to help.
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