Unlike residential real estate, commercial real estate investments are valued, bought and sold based on pure numbers - based on a set of factors that describe what kind of investment return you can expect with the property.
The term "commercial real estate investment" refers to the class of properties that are primarily intended to invest money for future profit. Examples of such properties are:
- Restaurants (including franchises)
- retail
- office buildings
- Self-storage (mini-warehouse)/industrial
- shopping malls
- Hotels (also called "hospitality")
- Apartment buildings / residential buildings
Why invest in commercial real estate?
Unlike residential real estate, commercial real estate is valued, bought and sold based on pure numbers - based on a number of factors that describe what kind of return you can expect from the property. Most commercial real estate investments are expected to pay you back on an ongoing (monthly) basis. With the boom in retail and increasing returns in the commercial real estate market, the value of commercial real estate has skyrocketed, especially in business parks where local retail stores and shopping complexes have been replaced by huge, swanky malls.
What to expect?
But remember. Commercial real estate investing is a long-term opportunity, do not expect your net worth to increase overnight. No one is going to make a profit all the time. Real estate investors also have to go through periods of little or no cash flow - that's part of the game.
It can lead to panic, but if you stick with it for the long haul, cash flow will increase. Investing, especially in real estate, is not for the faint of heart or weak of body. It can be frustrating and stressful. But for successful investors, the rewards are priceless.
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