Commercial Real Estate – Good or Bad?
Real estate comes in all shapes and sizes from big and small to wide and tall. There is no such thing as a one size fits all when it comes to sourcing real estate deals. For example, you could own the shop in Times Square rented to Apple or the corner store rented to Jack and his wife. The key outcome you should be looking for when making your investment is how much does it cost to purchase versus future growth versus rental incomes.
Investors tend to want high rental returns but with a focus on stability. So in answering the question “is commercial real estate a good investment?” we here at FJP Investment would agree that it is. We tend to find less defaults when it comes to tenants in commercial than you would in residential and while economies are retracting we are seeing the commercial sector hold its own.
In general, we have always found the commercial property sector to be favoured by our investors when looking for asset classes to make an investment. We love looking for a deal, seeing commercial real estate as a real good investment if done right. A lot of this comes down to research and being able to find the right commercial property at the right price.
We recently wrote about the pros and cons of commercial real estate and we concluded that such investment was worthy of spending serious time analysing deals in order to better manage your money yourself rather than play the markets.
What is a Commercial Property?
- Retail buildings
- Office buildings
- Industrial buildings
- Apartment buildings
- Mixed use buildings, where the property may have a mix, such as retail, office and apartments
The number one reason for making an investment in the commercial sector rather than residential is earning potential remains consistently higher. Commercial often achieves anywhere between 6% and 12% meanwhile residential varies between 1% and 4%.
When investors say 10% is too good to be true, it is often because they have never looked or considered the commercial sector to know the it is indeed the norm.
Real Estate Investing 101
Another important factor to consider especially with the retail sector, they are often incentivised to maintain their retail presence… e.g keep paying you rent!
If they do not maintain their retail locations it will often affect business as become the talk of the town. “Did you know So & So shut down” etc etc
I think another key selling point for going into the commercial sector rather than residential is that you are generally dealing with professionals. Businesses dealing with you are often easier than inexperience residential tenants with very few real world obligations.
FJP Investment – Commercial Real Estate Broker
The business has evolved a lot over the last few years, we have kept our promise of only offering the very best deals that we have been able to get our hands on. We always focus on the customer and go out and get the product that our customers are in the market for.
More often than not friends can bring valuable experience to the table but often we find too little experience is often an inexperienced source of advice.
Our products are constantly updating, new ideas are launching and we welcome you to come along for the ride.