Is commercial property investment profitable?

Properties in areas with growth. Properties that are in high-traffic areas are particularly good in the retail world, mainly because they are more likely to draw tenants who will renew their leases. These areas also tend to attract new tenants if current occupants leave for any reason. Another good example of an area with the potential for growth is a new suburb, which can be a magnet for real estate investors.

Properties with triple net leases. Triple net leases typically refer to single-tenant spaces. Those tenants, however, usually sign long-term leases. If you are new to the commercial real estate market, you may also be interest in triple net properties, the reason being that triple net leases place the responsibility of paying maintenance, building insurance, and real estate taxes in the tenant’s hands.

It also allows you a stable income from your investment, instead of estimating payment based on projected costs, such as maintenance. In other words, you do not have to worry about continual maintenance, which can be beneficial to millennials who want to invest in real estate but do not want to quit their day jobs. This investment can fit any lifestyle.

What makes a commercial property a good investment?

When we talk about commercial properties, we’re usually talking about office buildings, retail spaces, industrial buildings, apartment buildings, and warehouses, among others. While successfully managing these investments can be nuanced, there are definite benefits. Here are a few reasons why commercial property is a good investment.

Income potential. This is the number one reason that commercial property is a good investment over, say, residential rentals. Depending on the area and certain economic factors, commercial properties can have an annual return off the purchase price of up to 12%. By comparison, single-family-home properties usually have an annual return off the purchase price of 4%, tops.