Investing in real estate is one of the best investments that a person can make because real estate prices continue to appreciate. Unlike other means of investing, like stocks, real estate is often predictable and expected to appreciate. You can invest in real estate and receive regular income each month.
Before you investing in real estate it is always smart to first do your research. You should research the area you want to invest in, get a great real estate agent (or become one yourself), understand the different ways to invest, talk with people who have invested in the past, and also build relationships with experts who can help you. After you extensively research the real estate market in your area you will likely be left with two real estate investment options, residential real estate and commercial real estate.
Typically, residential real estate is the best way to get your foot in the door. Purchasing a single-family home allows you to focus all of your attention on a single property. You can quickly and easily find out what works and gain experience managing a property. You can build upon your strengths and improve upon your weaknesses while you earn cash each month.
Once you understand the challenges associated with residential real estate investments you can try to make your way into commercial real estate. Many people may wait years before investing in commercial real estate because it may require a larger upfront financial commitment. While the financial commitment for commercial buildings and are typically more complex than residential investments, there are significant benefits that include:
- Higher Income Possibilities: When you rent commercial real estate you can often charge much higher rates because the amount of available commercial space is often limited. You can increase your income quickly by collecting higher rent each month.
- Less Risk: When you have a commercial real estate investment you often have more clients, which can limit your risk. For example, if you own a single family home and the tenant moves out you have no income coming in. If you own a commercial real estate property, like an office complex, you will not be affected as much if only one tenant moves out.
- Security: You will not have to worry as much about the security of your commercial real estate properties as you would a single residential property. Commercial properties are typically located in well lit, public areas and they have more people there to watch out for the property. You also have more tenants at these locations throughout the day and night so they will likely contact you if there is an issue.
If you are looking to make a commercial real estate investment you should understand the different opportunities that you have to invest in. Some of these options may be more achievable, depending on the area that you live in.
Office Space: Purchasing a single office or a few offices within the same complex can increase your income potential because these properties tend to be cheaper than other commercial properties but you can charge a decent rental price each month. These tenants often tend to stay for longer duration which provides added security.
Retail: These properties tend to get more expensive, depending on the location but allow for high dollar returns.
Multi-Family: Multi-family homes, like condominiums and apartment complexes, may be difficult to purchase but a large number of tenants reduces your risk of investing.
Warehouse: Warehouse space may be difficult to find, depending on where you live, but is a great investment opportunity because there is often low responsibility.
Making the transition from residential real estate investing into commercial buildings can be a bit overwhelming at first, but with experience the rewards are well worth the effort.
