Commercial Real Estate: The big profits

Real estate is often termed as the safest investment avenue. In fact, real estate investments done with proper evaluation of the property (and its true value), can lead to good profits. This is one reason why some people pursue real estate investment as their full time job. The talks of real estate are generally focussed towards residential real estate; commercial real estate seems to take a back seat. However, commercial real estate too is a good option for investing in real estate.

It includes a lot of different kinds of properties. Most people relate commercial real estate with only office complexes or factories/ industrial units. However, that is not all of commercial real estate. There is more to commercial real estate. Health care centers, retail structures and warehouse are all good examples of this. Even residential properties like apartments (or any property that consists of more than four residential units) are considered real estate. In fact, such commercial real estate is much in demand.

So, is commercial real estate really profitable? Well, if it were not profitable I would not have been writing about commercial real estate at all. So, it is profitable for sure. The only thing with this is that recognizing the opportunity is a bit difficult as compared to residential real estate. But its profits can be real big (in fact, much bigger than you would expect from residential real estate of the same proportion). You could take up this for either reselling after appreciation or for renting out to, say, retailers.

Its development is in fact treated as the first sign for growth of residential real estate. Once you know of the possibility of significant commercial growth in the region (either due to tax breaks or whatever), you should start evaluating the potential for appreciation in the prices of commercial real estate and then go for it quickly (as soon as you find a good deal). And you must really work towards getting a good deal. Get your mortgage broker to explain not only what your monthly payment will be. If you find that, e.g. land, is available in big chunks which are too expensive for you to buy, you could look at forming a small investor group (with your friends) and buy it together (and split the profits later). In some cases e.g. when a retail boom is expected in a region, you might find it profitable to buy a property that you can convert into a warehouse for the purpose of renting to small businesses.

Sure, it may seem great that you're lowering your $1200 monthly payment by $100, but when you factor in the extra 120 payments of $1100 that you'll have after refinancing, you'll find that your "$100 monthly savings" will actually cost an extra $108,000 over the life of the loan! ($1100 times 360 payments over 30 years is $108,000 more than $1200 times 240 months.)

So commercial real estate presents a whole plethora of investing opportunities, you just need to grab it.