The Ins and Outs of Commercial Real Estate

Commercial real estate is the type of real estate that includes office buildings, retail buildings and apartment complexes. With commercial real estate, a number of investors and owners can make lots of money in profits as well as building wealth. Getting involved in commercial real estate can therefore be quite lucrative. When looking to get involved in commercial real estate, it will be important to know about a number of things. These include the types of property that you can get, hot to purchase properties, how to sell them, financing and also how to market them. Knowing these things will allow investors to get a better understanding of commercial real estate. 

TYPES OF PROPERTY 

There are two primary types of property in commercial real estate. These types of properties are office buildings and retail complexes. Both of these are centered around commercial and business interests of the owners and tenants. With these two types of properties, investors can control property that will allow them to benefit from owning commercial real estate. 

The first type of commercial real estate is office buildings. These are large properties that are designed to have companies occupy office suites and conduct business. In an office building, there will likely be around 100 units which serve as individual suites. A property such as this will also be up to 50,000 square feet as well. An office building is therefore a property that is quite lucrative for investors and beneficial for businesses that are looking to have a stable place to conduct operations. 

Another type of commercial real estate is retail complexes. These are also known as strip malls in most areas. A retail complex will have a number of small businesses that operate in individual units. Most of these properties will have around 20 units per property. Like office buildings, the retail complexes are designed to accommodate entities that are looking to engage in commerce. They are also quite lucrative for owners and convenient for small businesses that are looking to run their organizations. 

PURCHASING 

Like all types of real estate, commercial real estate will need to be bought. When looking to buy commercial real estate, you will need to go through the same process as buying a residential property such as a house. It will be required that you put a certain amount of money down and then finance the remaining amount. In most cases, commercial real estate will require a down payment of 30% of the value. You will need to go through a closing process where you complete all of the financing and title paperwork and then be awarded the property to own and control. 

LEASING 

Once you acquire a commercial property, it will be important to maintain a steady stream of leases. You will need to maintain the building’s current tenants and get new ones on a regular basis. Rental income is the source of revenue that you need in order to pay the mortgage and make a profit. Like a regular residential property, you will need to get tenants to sign an agreement where they will pay a certain amount each month for about 6 months to one year. 

FINANCING 

During the process of buying a commercial property, you will want to look into a number of financing options. In most cases, lenders will provide up to 70% of the property value for commercial real estate. Buyers of commercial real estate will often put the 30% down and then fill out a loan application. With a commercial real estate loan, the lender will consider things such as the borrower’s income, real estate ownership experience, credit score and also the revenue and profitability of the property. Most commercial real estate financing options are conventional loans where the interest rate will be comparable to the ones in the residential market. With the right financing, investors will be able to successfully acquire commercial real estate. 

SELLING PROPERTY 

As well as buying commercial real estate, owners may eventually decide to sell it. The selling process is similar to that of residential real estate. However, you will likely need to sell the property to a group of investors who are pooling their money to buy the property. During the selling process, you will need to list the property for the market value price and then receive offers. Once you find an offer that is sufficient for your financial needs, then you will finalize the process with the closing and receive your funds. Once you sell a commercial real estate property, you will likely receive a very high amount of profits that can benefit your financial situation.