Commercial Properties 101 - A Beginner’s Guide to Identifying These Investment Opportunities
When the majority of people think about real estate investing, they rarely think beyond residential properties. However, the truth is that commercial properties incredibly abundant and has the potential to help you achieve great levels of success as an investor.
However, while residential investments can feel incredibly straightforward, commercial properties can feel a bit more intimidating to new investors. The path into the commercial real estate market is not always clear and as a result many people turn away from these investments and miss out on the potential to grow their wealth significantly.
So, if you are ready to start investing in commercial properties, let us help you. All you need to do is click the link below to book a free strategy call to discuss financing and investment options suited to you and your portfolio.
Understand the Types of Commercial Properties
The first thing you need to know about commercial properties is how varied the market is. In fact, there are eight main styles of commercial properties that you should know about, and each category covers a wide variety of different property types. This means that there is plenty of room for you to specialize and develop an investment strategy to suit specific niches.
So, in order to help you get started with investing in commercial properties, here is a simple guide to the eight types of commercial properties and how each one can become a valuable investment.
Multifamily
Large multifamily properties are the closest thing to traditional residential real estate investing you will find in the commercial market. As a result, they are frequently a popular starting point for investors looking to dip their toes into commercial real estate without going into unfamiliar territory.
These can range from duplexes, to triplexes, to high-rise apartment complexes. Each of these properties come with their own different needs and key factors for you to consider, so it is important to weigh your options to determine what each investment will require from you.
Offices
Office buildings are frequently categorized by size and quality. Frequently sorted into high-rise, mid-rise, and low-rise categories, each office building may also be assigned a class based on its condition and appeal.
Class A buildings are considered the best investments, being located in the best places, and left in the best condition.
Class B buildings are typically in good condition but may not be in the optimal location.
Class C buildings are usually in worse condition and are not located in prime neighbourhoods.
Industrial
Industrial real estate is exactly what it sounds like. These are properties such as manufacturing facilities, warehouses, and assembly plants. Often the specifications these properties will need to meet will rely on relationships with existing companies and as a result can be more complicated than other commercial investments. Usually, these properties are not ideal for beginners.
Retail
Retail properties are capable of ranging between single storefronts and large-scale shopping malls and retail centers.
These properties are great if you are able to establish a relationship with a business owner who is currently looking for a storefront, or large-scale retailers such as Wal-Mart or Best Buy who are frequently in need of new locations to expand their business.
For malls and other multi-unit retail properties, you may want to consider forming a partnership with a company who specializes in communicating with large retail brands in order to occupy all of your units.
Discover How To Apply For An Investment Property Mortgages With This Step By Step Guide
Hotels
Hotels are often split into three main categories, extended stay hotels, limited-service hotels, and full-service hotels.
Extended Stay Hotels
These properties are usually designed to accommodate guests who plan to stay for a week or longer. As a result, they may include features such as kitchens in their rooms to better service their clients.
Limited-Service Hotels
These are usually boutique properties. While they are designed for shorter stays, they do not provide some of the amenities and features included by full-service hotels.
Full-Service Hotels
These are frequently your big-name hotel brands and will include features such as room service, in-house restaurants, and event spaces.
Mixed-Use Real Estate
Mixed-use real estate is essentially any property that combines any two-or-more of the previous categories. This can include retail space with offices or apartments on top, multi-family properties that feature an office space and more.
Land
Land is considered a commercial property. This can include undeveloped land, infill land – land that was once developed but is now empty, and brownfield land – land that was once used for industrial or commercial ventures but is now vacant and ready to be redeveloped. Land is a popular investment among those looking to hold onto it for the appreciation, and real estate developers looking to secure a site for their next project.
Special-Purpose Real Estate
Special-purpose real estate is a catch-all category for the commercial properties that do not fit into the previous categories. This can include properties such as amusement parts and entertainment venues, public or private parks and more.
One of the most abundant forms of special-purpose real estate that is often in high-demand, but many new investors can easily overlook is parking lots.
Bonus: Buying Residential Properties with a Commercial Lender
Did you know that it is possible to buy residential investment properties by using a commercial mortgage lender? As long as the property you are purchasing is not your primary residence and you are in the right financial position, many commercial mortgage lenders will gladly lend on these properties to help you bolster your investment portfolio.
To learn more about commercial properties and commercial investing and how you can use it to experience more of the world of real estate investing, give us a call at LendCity and ask to speak with a member of our dedicated commercial team. They will gladly provide you with the guidance you need. To get started, you can visit us at LendCity.ca or give us a call at 519-960-0370. Alternatively, you can book a free strategy call with us at the link below.