Real estate business is growing exponentially, thus demonstrating that the brick-and-mortar industry has managed to stay afloat in the digitally inspired business world. So far, commercial real estate has been a huge attraction for business owners and investors, which is what has made commercial real estate investing practices so trending and profitable. In this regard, we would like to throw some light on how to commence your commercial real estate investing journey!
First, let’s come to grips with what commercial real estate is.
What Is Commercial Real Estate?
Commercial real estate is the property used for business purposes: from buying goods to renting a workspace. To put it bluntly, commercial real estate is used in commerce. This type of real estate is most often rented by the tenants who generate income and have commercial goals.
Commercial real estate comprises a number of real estate categories like shopping malls, catering facilities, hotels&resorts, and healthcare facilities. Alongside residential real estate, commercial real estate is one of the two main branches of real estate property.
Types of Commercial Real Estate
Depending on functionality, commercial real estate falls into four categories:
• Office use;
• Industrial use;
• Multi-family rental;
• Retail real estate.
Office real estate
Office space is the most common type of real estate. Office real estate varies based on three categories: Class A, Class B, or Class C.
The commercial properties of Class A are newly built, advanced, and high-class buildings with convenient location.
Class B commercial investment properties are, as a rule, a little more aged than Class A buildings. These properties are well-managed and may sometimes require capital investments and small improvements.
Class C properties are utilized for redevelopment. Most often, they have bad location and require a substantial rental property investment and renovations.
What Is Investing in Real Estate?
Real estate investing is the purchasing, owing, and managing of real estate for profit gain. The practice also includes the improvement of real estate property and uses liquid investment instruments.
Pros of Investing in Real Estate
• Investing in real estate is easy
Real estate investing is quite a straightforward practice to adopt, which is one of the main factors that attract sharp-witted entrepreneurs to venture into real property investment. The business doesn’t require investors to come up with sophisticated strategies or technologies for implementing their business activity.
• You can generate passive income in no time
Yes, what’s about making investments is how easily and quickly you can get rich. And real estate investing is the category of investment culture that helps business adepts rake it in effortlessly.
• It comes with reduced volatility
Providing stable, consistent ROI, real estate investments have low volatility as opposed to traditional investment assets such as stock market. The consistency of real estate market lies in the growing residential property and lease terms.
Cons of Real Estate Investing
• Real estate investing requires many resources
As an illiquid asset, real estate is somewhat difficult to sell. This is what challenges most business owners as, to maintain a favorable investing activity,
• Illiquid investments require many resources
To put it simply, real estate properties are illiquid assets that make it difficult for investors maintain proper cash flow. An illiquid asset is an asset difficult to sell and this is what makes real estate business a challenging venture even for seasoned entrepreneurs.
