Investing in commercial real estate can take on several forms. Some of the most common examples include apartment buildings, shopping malls, industrial property, healthcare establishments, and warehouses. While investing in commercial real estate can make attractive passive income or a main job, people sometimes resist doing it because they don’t understand how to get into it or where to invest their money. We hope the information below will help you feel more confident if you’re considering this investment tool.
How to Earn Rental Income
These investments might work for well for you if you’re interested in earning rental income each month:
- Apartment buildings: The owners of multi-family apartment buildings typically rent each unit for one year or less with the initial lease. The tenant then has the option to renew the lease based on the terms that you set. While month to month rental is an option, it means more tenants in and out of your building and all the preparation work that comes with each new tenant.
- Industrial: The usual tenant for an industrial building is a distribution or manufacturing company. Lease terms typically run much longer than residential renting with an average initial term of five years.
- Office: Renting office space to businesses priced by the square foot can be a profitable venture. Like industrial renting, the initial lease can be as long as five years. This creates much less work for you upfront.
Earn a Profit When Property Values Increase
Some people prefer to purchase a property with cash and then make a profit when selling the same property in a process known as house flipping. It’s important to remember that the property can also lose value over time due to circumstances you can’t always control such as a financial recession. You can increase the chances of selling for a profit by making regular upgrades to the property.
When you’re ready to learn more about real estate investing, contact GP Solutions to request an appointment with one of our financial counselors.