Investing in Commercial Real Estate Part 2: Commercial Real Estate Investment Opportunities

Remember that commercial real estate is purchased with the intention of making money. It also excludes smaller residential properties. Residential properties must have at least five units to be considered commercial property. Renting a home or duplex doesn’t qualify.

Several common types of property qualify as commercial properties:

1. Retail shopping. This is the type of property most beginning investors envision when considering commercial property.

• Strip mall
• Large shopping center
• Beauty salon
• Gas station
• Any other retail property. It can be a single unit, such as a stand-alone flower shop.
• Even larger stores, such as Walmart often lease their buildings from someone else.
  

2. Apartment buildings with five units or more. Few of us haven’t lived in a large apartment complex at some point. This category includes smaller buildings with several units to large, multi-building complexes that house 1,000 people or more.
   
3. Office buildings. Whether small or large, any office building satisfies the requirements of a commercial property.
   
4. Hotels, motels, resorts. These larger properties can generate a lot of income, but also require a lot of overhead, including several employees.
   
5. Medical buildings. Your doctor or dentist may be in such a building.
   
6. Warehouses. All the products you see in the stores have to be stored somewhere before shipping.
   
7. Mobile home parks. Mobile home parks are another type of commercial property. The tenants pay rent for the lot. Some parks also rent the mobile homes themselves, too. Campgrounds could also be considered commercial property.
8. Self-Storage Facilities. If you’ve ever decided your garage was too full, you might have used the services of a self-storage facility. Fortunately, many people have more things than they can store at home.
   
9. Industrial property. This could be a manufacturing facility or any type of industrial property. What’s the difference between a retail property and an industrial property? Retail properties are in the business of selling a product or service directly to the average consumer. Retail properties also have customers on site.

• Industrial properties don’t allow the general public on site.

You can probably think of other types of commercial properties:

• Private airport
• Senior facilities
• Ranch
• Farm
• Movie theater
• Private cemetery
• Bowling alley

Commercial properties are very common. There’s little reason for the beginning investor to feel intimidated. It’s easy to see that some types of property require more financing or expertise than others. Start with a type of property that you understand. There’s something for every type of investor.

“Commercial real estate always trails residential, and as residential growth flourishes, shopping centers flourish and service the communities, and jobs come out.”

– Johnny Isakson

Thanks for reading! Stay tuned over the next few weeks for the rest of this series, and as always, give us a holler if you want to chat about your own CRE investing journey.