Which Commercial Properties Are The Most Profitable?
If you have taken the decision that you would like to invest in commercial property in Fort Polk, you might be wondering how you can get the most return on your investment. According to the experts at EXIT Real Estate Consultants, there are many things to think about when investing in commercial property. If your goal is to make the most money, then some types of real estate are definitely worth looking at.
Where is the Most Money Made in Commercial Real Estate?
The most money comes from properties with a higher number of tenants. Obviously, you are going to make more if you can get more people in, so looking at properties such as office blocks, self-storage facilities, multifamily units, and student housing accommodation is a good idea. If your commercial property can house a number of small businesses for example, then you will get more rental income than you would from one large corporation renting the premises.
You will also earn a higher rental yield if you have a property in a desirable location. Looking for property in up-and-coming neighborhoods makes sense. You can get information from an experienced real estate agent regarding which areas you should look at. Buying property in a high-traffic area means you are less likely to have prolonged periods where the premises is unoccupied between tenants, and you are much more likely to see tenants renew their leases if business is booming.
If you buy a large property that can accommodate one business only, such as a manufacturing company, you can enjoy a high return on your investment by offering a triple net lease. This means that the tenant will sign a long lease and will accept responsibility for things like buildings insurance, property taxes, and maintenance. This type of lease gives the commercial investor the ability to earn an income without the need to deduct the cost of maintenance and taxes.
What are the Downsides of Commercial Property Investment?
As with all real estate investment, commercial property investment comes with risk, and some properties are riskier than others. For example, single tenant properties such as hair salons, retail stores, or auto dealerships carry the greatest risk for the investor. This is because should the tenant go out of business, the property owner will be left with a vacant property and will then have to cover the costs of paying the mortgage. Or if they own the property outright, they will lose out on a valuable income stream.
It is also worth noting that although multi-tenant properties yield the highest return on investment, they do mean more work for the landlord. The more tenants you have, the more time you are going to have to commit to taking care of their individual needs. You will have multiple leases to manage as well as property management and health and safety concerns associated with the use of the building. You could hire a property management company to take care of this for you, but you will need to factor this cost into your calculations when deciding whether it is worth investing in a particular property or not.
When it comes to commercial investment, there are some property types that are more profitable than others, such as those that house multiple tenants or those that are in desirable locations. If you are thinking of investing in commercial property, you should be aware of the potential downsides, including the property being vacant for long periods between tenants in the case of single occupancy properties or the time commitment required for multi-tenant properties.