Commercial real estate investing offers some of the highest income streams available, so it’s no wonder that individuals would be interested in an investment opportunity that likely offers a lower turnover of tenants, thus translating into a steadier monthly cash flow. Nevertheless, it’s important to review at least some of the basics of a commercial property investment to ensure that investing in a warehouse, office, mixed-use, retail, industrial or apartment building in the Boston area truly aligns with one’s overall investment strategy.
The Basics of Commercial Investment
Some might assume that the highest monthly cash flow investment would be the best opportunity, however, that is not necessarily the case. It’s also important to consider how much one might need to add value to an investment. Examples of value-added items include interior renovation and/or improvements such as landscaping or remodeling a building’s exterior.
Other considerations include the anticipated appreciation of business property (it should look promising), within the timeframe an investor plans to hold onto the property.
Which Type is Best for You?
Investors who may have owned a small business in the past may be more comfortable beginning their investment career in a warehouse, office, or retail property. Others may be more comfortable making the switch from a single-family landlord to investing in an apartment building. Having at least some practical knowledge about the various types of commercial investments available may also be an advantage when it comes to accurately comparing the current market value of a property against the location, style, and size of nearby competitors.
More Stringent Financing
Be prepared to meet or exceed the financing requirements for commercial investments, which is typically higher than for residential investments. Most lending institutions require that commercial investors meet higher income or net worth standards, in addition to making a larger financial commitment.
Contact R.H. Blanchard
It’s important to weigh the pros (higher income stream, lower vacancy risk) of investing in commercial properties vs the cons (rigorous financing, more complex planning), especially for those most comfortable with residential properties. If you would like more tips on how to become a successful commercial investor in the Boston area, please contact us at R.H. Blanchard.