Different types of Commercial Real Estate

Published by: bizopps on 28th Feb 2010 | View all blogs by bizopps

Apartment Buildings: These can be great investments. They are readily available, banks are willing to offer loans on them and they can be an excellent source of cash flow. Many investors get their start in commercial investing with apartment buildings. The key is to make sure the building is properly managed. If it is, an apartment building can be a source of positive cash flows long-term and build up equity over time. The disadvantage of course is that property management can be time consuming.

Mobile Home Parks: These can potentially be profitable as there is not a lot of development that needs to be done. Income can be made not only from rents but also from buy and selling mobile homes in the parks for profit. The important thing to look for when considering a property is the occupancy rate and location. If the vacancy rate is high or in an undesirable area the park may not be a good investment.

Retail Centers: (shopping centers/malls) are another excellent type of commercial real estate investing. One advantage is that they are generally leased out on a long-term basis with triple net terms in which tenants pay for property expenses such as real estate taxes, property insurance as well as maintenance and repairs.

Office Buildings: Long-term and triple net leases are also used with these types of commercial real estate. The key is to find office buildings in desirable areas with low vacancy rates.

Industrial, Manufacturing and Warehouses: These are usually solid investments as there is usually strong demand for industrial and manufacturing space.

Hotels and Resorts: This type of commercial real estate investment is not really suitable for beginning investors, but those who are experienced can find these investments to be quite profitable. It is usually advised to let these types of investments be managed professionally by companies with specific experience in the hotel and resort business.

Health Care Facilities: This includes nursing homes and assisted living centers. They can be be excellent investments because there is increasing demand for these services and financing for these types of properties is readily available.

Land Development: This can be an exciting and potentially lucrative investment, when you take land without property on it and improve it. It can also be risky and does require experience to do well with land development.

Agricultural land: Areas used primarily for production of food and/or fiber (excludes wood fiber). Examples are cropland, pasture, orchards, vineyards, nurseries, confined feeding areas, farmsteads, and ranch headquarters.

Other types of commercial real estate investing include self-storage and mini-storage, senior housing, campgrounds and RV parks, car washes, golf courses, entertainment centers, gas stations and other specialty properties. Some types of commercial real estate investing are more complicated and require more property or industry specific expertise than others, so you will need to research your options to find which types of investments suit your goals, experience and abilities.

~Mark Strickland (bizopps)
I will be continuing my research on this.
 I hope this shows up correctly. Also I'm locating the credits to give credit where credit is due.

So How Does Self Storage Stack up against other forms of Commercial Real Estate Investments?

When comparing Self Storage to other real estate investments such as Apartments, Office Buildings, and Retail, how do they compare? Lets explore some of the most important factors.

 

Development Costs

Development Costs Graph

The development cost of self storage is one-third to one-half that of Apartments (multi-family), office buildings, or retail properties.

 

Operating Costs

Operating Costs Graph

Owning Real Estate requires regular maintenance of the grounds, appliances, plumbing, electrical fixtures, etc., which usually require a maintenance staff. As the graph illustrates, self-storage operating costs are less than half that of other real estate properties.

 

Break-Even Occupancy Rates

Brake-even occupancy rate Graph

When owning investment property, you simply must fill a certain amount of space to keep from losing money. In self storage, this break-even point is considerably lower than other real estate ventures due to its low development costs.

 

Annual Rent Ranges

Annual Rent Ranges Graph

This chart illustrates that the annual rent ranges for self storage fall within the range of other real estate. However, considering the lower development and operational costs we discussed above, self storage can yield a better bottom line.

 

Failure Rate Comparison

Failure Rate Comparison Graph

Compared to other real estate investments, self storage has the ability to absorb economic fluctuations, maintaining value during both good and bad economic times.

 This page came from: Scott Meyers, CSSM©, The nation’s leading Self Storage Investment educator.

http://reieducator.com/selfstorage
 

Comments

0 Comments

     
Please login or sign up to post on this network.
Click here to sign up now.