Making the Move From Housing to Commercial Real Estate

A Scripted Freelance Writer Writing Sample

Investors in real estate often start their portfolio by purchasing a home, condo or vacation property that will bring a solid income with minimal risk. That's fine for the small investor, but if you want to move into the big leagues, it's time to consider investing in commercial real estate. And there's no better time than now to make that move. Positive economic indicators, including increased job growth and declining vacancy rates, is fueling interest in the commercial market by both speculators and individuals looking for a safe return on their investment. Making the move can be a daunting task for the first timer, however. To make it a bit easier, follow these steps before you make that first big offer.

Find a Property That Fits Your Goals

Before consulting with a commercial real estate broker, decide which type of property fits your needs and your pocketbook. Much like the housing market, there's an array of properties to choose from, but commercial real estate offers an even richer diversity. Commercial real estate isn't limited to string of storefront shops or towering office buildings. It's warehouses, parking lots, restaurants, laboratories, factory buildings, tanning and hair salons, and car washes. In fact, just about any piece of property that sells or makes a product or service falls under the commercial real estate banner. Once you decide on the type of commercial property in which you want to invest and how much you want to spend, it's time to contact a commercial real estate broker. Real estate brokers can direct you to properties that may be in the path of development, advise you on neighborhood trends or steer you clear of problem areas. Their knowledge will guide you to your first property and position you to earn you first commercial profit.

Understand the Deal

However, it's up to you, as an investor to ask the right questions and understand the deal. That means doing your research, not only on the property and the cost of ownership but also researching the percentage of return. Triple net properties--generally freestanding buildings--offer a good entry point into the commercial market because of their leases, in which the renter agrees to pay all taxes, repairs and insurance on a property along with rent and utilities.

An Easy Approach to Buying Commercial Property

For investors still apprehensive about stepping into the commercial real estate scene, there's yet another option; Real Estate Investment Trusts (REITS). These trusts, obtained through a stock brokerage, allow investors to place their money in a large portfolio of real estate offerings, giving investors a diversified commercial portfolio that might be hard to obtain yourself. Whether you are buying your first commercial property or investing in a REIT, it's a good idea to diversify your real estate portfolio by adding a commercial component. After all, with commercial real estate experts expecting the rate of return to top 9 percent this year, commercial real estate is among the top performing assets in the country. Now that's a sweet deal.

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