There are bonds, stocks, homes & then there’s commercial real estate. It’s an investment vehicle that’s garnering increasing interest. Many investors start with little & make a lot. But the key is to have the right information, work with the right advisor & scrutinize every detail.
For those who want to create greater value & to diversify their investment portfolio, here’s a scaled down list of general pros & cons of CRE investing:
· Tenants pay rent plus landlord expenses
· Long-term leases (3-5 years) are common
· No restrictions on rent increase
· Less emphasis on qualifying for financing
· More emphasis on the building quality, tenants & leases
· A large % towards down payment is required
· Financing a commercial property is complex & costly
· Costly renovations for new tenants
· Lengthy process to fill a commercial unit
· Higher vacancy rates for commercial properties
I advise investors to identify their motivations for investing in CRE. Identify a potential property in the market. And then run the numbers with an advisor. Learn where to start & how to grow your CRE investment. Happy to help.