MARTIN LANDIS

Managing Member (CEO) of Landwin, LLC

If you are new to the world of real estate, you may be feeling a little lost when it comes to choosing a property that will give you the biggest return for your money. Residential properties may seem tempting because they give you a little bit more control, but it is always a smart option to invest in commercial properties. What are commercial properties? Why should you invest in them over any other property? You are about to find out!

What Are Commercial Properties?

As you may have guessed already, “commercial” is a word closely associated with fields of business. Commercial properties include things like:

  • Offices
  • Warehouses
  • Retail stores
  • Factories
  • Apartment buildings

Some are even a mix of two or more of these examples.

Advantages of Investment in Commercial Properties

There are several compelling reasons why investing in one of these properties is a great business move. Some may be obvious, but there are things you may not have even considered that will make all the difference in the long run.

More Potential for Income

Numbers don’t lie. The average annual return of commercial properties is somewhere between 6-12% of purchase price. That may not sound like much to you, but it is actually far more than you would get if you invested in a residential property. The average annual return from a single family home is somewhere between 1-4%. Money matters, so it is crucial that you get back the most you can.

Being in the Public Eye

Don’t let that scare you. This is actually a good thing! Residents of a property tend to care less about what their homes and lawns look like that a store owner or corporation would. Families are not trying to attract people to the building you have invested in; business owners are. Your tenants will practically do all of the upkeep for you! This keeps the value of the property high.

Limited Work Hours

When you are the property owner of a small home, your work never ends. If a tenant needs home maintenance done or loses something like the house key, you have to work with them to get the issue fixed no matter what time it is. If you don’t, you may look like a bad owner. When you invest in a business, however, you do not have any of the same worries or duties you would with the former. When they are done for the day, so are you.

Fairer Pricing

Almost everyone has some sort of compassion for people in need. When you work one-on-one with a family, you may be drawn in by their financial problems and it will compel you to buy from a seller at a higher price than may be fair. Businesses are prepared to deal with what you think is fair and will work with your evaluations, no emotions involved.

Why Not to Invest in Other Properties

We have given you some of the benefits of investing in commercial properties, but we never Commercial Property outright told you why you should not invest in others. It is really quite simple!

  • The cash flow in residential properties is not as steady. Businesses generally pay their rent on time; individual tenants do not always do so.
  • Families can be more stubborn when it comes to abiding by property rules. You may have a chunk of your time eaten up by going to court over eviction disputes than you spend relaxing in your own home.
  • Leases for residents are shorter than they are for businesses. You have a longer-term commitment with a business and will thus worry less about where your next paycheck will come from for a longer period of time.
  • Tenants in residential properties expect you, as the owner, to pay for maintenance. Businesses usually do not.

In short, there are a plethora of reasons why investing in a commercial property is just all around better for you financially and mentally! Your cash flow will be steady, you will not have to worry about repairs, and you get more money than you would in any other instance. You pay more initially, and working with lawyers can be daunting, but at the end of the day you get to kick back and relax without being on call. Honestly, what could beat that?

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