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Understanding the commercial real estate market

On Behalf of | Nov 9, 2018 | Commercial Real Estate |

California investors may be curious about the potential of entering the commercial real estate market, especially if they’ve already been active in residential properties. There are a number of unique characteristics that can make the commercial property market particularly appealing to investors. Commercial leases are often long-term, reducing the level of effort needed to keep or find new tenants on a regular basis, even though the negotiation of any particular contract may require additional work. In addition, as commercial properties are often multi-unit, investors can receive several revenue streams from one property.

There are multiple types of properties for commercial real estate investors to choose, including medical facilities, warehouses, office buildings, retail spaces, and storage areas. Even car washes and laundromats can be particularly profitables. They are often classified by grade. Grade-A properties are newer and well-located, grade-B properties require some work but have potential, and grade-C properties need significant renovations and are less conveniently located. In general, these are long-term investments that reap profits through years of ownership rather than through short-term growth. In addition, these investments can tolerate market fluctuations more readily than homes.

People can get involved in commercial property investing in several ways. Co-investing allows several people to come together to buy a property, sharing in the responsibilities and the profits by percentage of ownership. On the other hand, buying into a real estate investment trust is more like buying stock or other traditional securities. Investors can benefit from profits but are not involved in the operation of the property itself.

When people decide to invest in commercial real estate, there are a number of factors to consider. It thus might be advisable to have the assistance of an attorney who has experience in these matters.