As a whole, the real estate industry has experienced an increase in popularity and demand as of lately, and for appropriate reasons. For the residential sector of real estate, homes are not only much more affordable, but also much more obtainable. Given that the demand for a place to live will always exist, potential homeowners are now aspiring to qualify for home ownership. Traditionally, in order to purchase or even rent a home, an individual must possess a respectable credit-score as well as have the ability to put down a certain percentage of the home’s value in the form of a down payment. As for the selling of residential homes, the opportunities presented are some of the most superior, as it is not a necessarily difficult task to obtain a real estate broker’s license. However, when it comes to real estate, there are several other ways in which an individual can invest or purchase.
There are generally four common types of real estate including residential, industrial, land and perhaps the most opportunistic, commercial. In the world of real estate, the phrase commercial real estate refers to land or buildings preconceived to engender profits. Commercial real estate property includes industrial office buildings, medical offices and centers, malls and retail stores, hotels, applicable farm land, warehouses, multi-family housing buildings or apartment complexes, garages and much more. In essence, the primary difference between residential and commercial properties is that residential fabrication is space suitable for living, while commercial fabrication is generally associated with commerce.
Although there may be some disadvantages to commercial real estate such as strict zoning laws, maintenance responsibilities, taxes and possible tenant rollover, there are also many advantages in commercial real estate that only the savvy investors recognize. For an example, a business owner seeking to acquire medical offices for lease will benefit from the attractive leasing rates offered by commercial real estate. This is especially true for areas where the amount of suitable building land is limited as a result of the lack of land or strict laws. Consequently, commercial real estate has the ability to generate impressive returns in the form of monthly cash flow as long as the building is occupied by tenants. As long as those tenants remain in the building and continue to pay their monthly rent to the commercial building holder or owner, those holders can enjoy the benefits of substantial cash flow stability.
Depending on the amount of space occupied by a commercial building, the owner or investor of that building generally collects annual rent payments from each business that operates on their property, which is generally quoted by the amount of square footage. Although this is the most common scenario, sometimes business actually own the building which they occupy. For those who lease the property or do not actually own it, their leasing terms can range anywhere from one year to ten years or even more. In the majority of scenarios, the larger the remnant or business, the longer their leases tend to be.
