Commercial real estate is broad especially when you are describing any real estate property that can be used to generate more profit. Some major commercial real estate examples include industrial property, hotels, farmland, malls, warehouses, apartment buildings, office buildings medical centres and more.

The past couple of centuries are proof that investing in commercial real estate can be a great alternative asset. Real estate has provided millions if not billions to investors together with portfolio diversification and attractive risk adjustment returns.Most people, even investors do not understand how commercial real estate is an investment vehicle. 

There are very noticeable differences between commercial real estate investments and traditional business investments.  In traditional investments, deals are made more frequently and to a secondary market.  Real estate are scares resources that hold major value; they are a hard asset to all investors.  Other traditional investments are purchased for their value/selling potential while real estate is a source of income as well as long term investment.

Investment strategies for commercial properties are simple; you just have to keep in mind that the demand for a given property depends on the location.

Rental income from commercial real estate

Commercial investment properties come with different arrangements, lease agreements and property management requirements. Here are some common ones

Office – packing decks and cubicles are famous commercial real estate properties. A company is responsible for rental payment on the office space. Office spaces can bring in a surplus in property income.

Industrial real estate – this includes smokestacks, warehouses and more. The typical tenant here is a distribution or manufacturing company. Industrial complexes are not located in the same areas as retail or residential properties.

Apartment buildings – they come in all different structures.  Multifamily apartments typically house families of individuals as the tenants. The lease can be long or short term, the longest being 1 year and shortest being a month.

Appreciation and value from real estate property

You can benefit from an increase in the value of the commercial property over a period of time.  Appreciation by demand, value add approach and others can increase the intrinsic value of property and its ability to earn the owners more income. Keep in mind that properties can also lose their values depending on the structure, location, renovation periods and more. Purchasing commercial property is a risk, even the most secure real estate property can lose its value when affected by outside economic forces.

3 facts about commercial real estate

Commercial real estate property is everywhere- offices, retail space apartments and many others also count as commercial real estate property.

Commercial real estate brokers/owners earn money through income and appreciation. Income from real estate property is earned through building operation while increase in property value overtime leads to appreciation

 Investing in commercial real estate property will require your expertise, time and capital. This means that only the everyday investor can afford to make massive commercial real estate investments.

Unlike other forms of investment, commercial real estate can provide you with a lifetime of income when everything is done right. This mean the research, location, maintenance and more to add value of the property over time.

Real estate investments have the potential to generate a considerable amount of wealth but only when done right. Over the past decade, real estate investments had grown and helped to generate wealth for countless investors. For this reason, most people just into real estate deals without enquiry in the hopes of getting rich fast but that s not always the case.

While there are plenty of available opportunities in rea estate, it is important to understand all the types of real estate investments before you put in any cash. To be a shrewd investor, you have to start with understanding how real estate investment works and what to expect when you purchase any kind of real estate property.

Here is what you need to ask before you venture into real estate.

What makes a real estate property attractive?

The answer is pretty obvious to most people, money. Money is the number one thing that makes real estate property attractive to investors, and it is the reason why some of them do not have successful real estate businesses. If you want to success in this area, you need to learn and understand everything about real estate so you can understand what success really looks like.

Do you have enough time/expertise to actively invest in real estate?

Real estate requires either active or passive investment.  There are major differences between the two, and most investors have a clear inclination of one over the other. You need to figure out where your preference lies before it is too late and you make the wrong investments. If you have time on your hands, yours should consider an active investment so you can be more hands on with the property.  

What is the investment timeline?

The investment horizon/timeline is important for any real estate investor.  Will liquidity be prime for you in the future? You have to know when and if you will need liquidity and what kind of investment will support those particular needs.

What are your potential tax benefits?

The good thing about real estate is that both passive and active investments have the potential to give you tax advantages. The exact tax benefits you get will depend of the type of real estate investment.

For instance, when you make active real estate investments, you can defer capital gain taxes on your initial investments indefinitely trough the 1031 exchange while passive investors can qualify for up to 20% tax reduction thanks to the Job Act and Tax Cut.

How does real estate investment affect your portfolio?

One of the many benefits of real estate investments is the ability to diversify your portfolio. Making a real estate investment in private or public market will determine its power to diversify your portfolio. Keep in mind that not all portfolios diversification will be deemed as equal. This is why you have to understand the addition of real estate investment will impact the risk and earning potential in your situation.

Final word

You should choose the real estate investment type carefully depending on your desired return, risk tolerance, liquidity needs and investment. This ensures you make a safe real estate investment that will earn you major profits in the future.

Buying a new home is a good investment, can be a lot of fun and challenging at the same time. The situation is a lot worse for people looking t purchase a home within a limited time frame. Buying a home in a new country or state has its perks when done the right way.

What’s your budget?

This should be the first thing you consider before you purchase your new home. When setting up a budget, you have to be very realistic and practical otherwise you will not go past this stage. If you are looking to move to another country or city, consider creating a budget that takes into account your wages and cost of living in the new town.

You also have to consider how much it will cost you move, extra relocation fees, emergency fees and more to include into the budget. If you own a home and are planning to sell it, you could factor in how much you expect to earn from the home.

Secure a mortgage

 Many people are always in a hurry to find a home that they forget that the mortgage can take a long time to be approved.  If you get a pre-approval letter before purchasing the home, you get to know and fix your budget and make realistic offers. It makes it easier to find the home of your dreams when you have the right budget in mind.

Make a list of all the features you want in your home

Everyone has a picture in their mind of what a realistic home looks like and cost. Make a list of all the things you want in your new home keeping in mind the budget. Shopping for a family home is different when you have kids, when you do not and when you are planning on having one. You need to determine the actual home size and features that make for the perfect home. Rank them according to priority so you can know what to forgo when you find a home that is close to your ideal.

If you are planning to make the purchase as a couple, make a combined list of priorities so you can meet everyone’s needs.

Get to the neighbourhood

Once you have a budget and a mortgaging process all sort out, you need to start the searching process. You can do it online or physically depending on the availability.  Strat by looking at all the possible neighbourhoods that lies within your price range. Knowing your local market can help you decide if you will be able to afford a home in a specific area. Check out the local amenities like school and parks in the neighbourhood to ensure they work for you.

Come up with a list of questions you would like answers to

There are several things you should know about a home before buying it. Sometimes, sellers keep to themselves so they can sell the home fast. Questions pertaining to age, heat, cost of utilities, roofing, flooring and more are important for the buyer.   Take your time to inspect the property before you make a final decision.

DIY home renovations are easy and cheap but could cost you a lot on home renovations in the long run. While a hands-on approach to plumbing issues is cheaper, it could lead to major plumbing issues in the long run when you have no clue what you are doing. This calls for a professional to help or handle the pluming issues.

The home plumbing system is a complex one that you do not want to mess with. When it is not working property, there is a very high chance of creating water damage issues and staying without clean water. Hiring a good plumber will help you solve the issues professionally without the worry of creating more.

The first thing you need to do is figure out exactly what kind of plumber you will need. Surprisingly, not all plumbers are the same. Many have specialties in certain areas, some plumbers prefer to do service calls lie unclogging while others are restricted to installation services.

Their licence/insurance

Just like all other professionals, you want to work with a qualified plumber.  Having a proper licence and insurance will help protect the plumber’s business as well as the home owner in case of any accidents. Hire a plumber that is willing to operate only when they have a proper licence and are fully insured. Plumbers with half a million in liability insurance and up to date comp policy are best to work with especially when the home is new.

A warranty

A god tradesman should take pride in their work and stand behind it 100%. The plumber you are looking to hire should be familiar with the warranty of the manufacturer on all products they install in your home and they should follow that up with an additional workmanship warranty.

References and ratings

References and ratings can tell a lot about a plumber and their work. You have the right to ask the plumber for references for any similar home projects they did recently. If they do a good job, there is no reason they should not give you the references. Do not be afraid to ask past clients questions like what kind of project the plumber did, the communication and If they would hire the plumber again. 

You should be able to find the plumber/company ratings online with a couple of reviews from plats clients. If there are more bad reviews than good then you should reconsider hiring the plumber.

Soft skills

The plumber might have the best plumbing skills but how do they deal with clients in person? you want to hire a plumber that will respect you and your home. take the time to pay attention to little details about your interactions and communication.

What are the best places to look at when searching for a plumber?

One of the best ways to get a good plumber is by getting personal reference from a neighbour, family of friend. Not many people pay attention to the association and community involvement of the plumber in the community.

Home renovation projects can help increase the value of your home. the renovations can do with both a hand’s on and off approach. While hand’s on home renovations are cheaper, hiring qualified people leaves you with a more professional and good-looking job.

Here are simple steps to helps you renovate your home professionally on a budget

Create a plan

Coming up with a plan and sticking to it as much as you can is important if you want to renovate your home on a budget. This is the first step to keeping your costs down during the actual renovation process.  Make a two-part list of things you must have and thins you want to have. The latter is not as necessary as the items you must have for your home.

Choose the right people

You do not just pick anyone to do the job. If hiring a designer or contractor is included in your plan, ask for recommendations from trusted sources like families, friends, neighbours and workmates. You can also check out reviews online to ensure you are getting the right person for the job. Do plenty of research by looking into people who have had similar works done by the contractors before.

Set a limit

People who have been in real estate for a longer period of time say that you should not have to spend money on a house if the value of each room as a percentage is higher than the value of the overall house.  For instance, the kitchen should account for around 15% of the property value.  This means If the home is worth 300,000 dollars you should set the limit to lower than 45,000 for renovation.

Do not rush the process

Talk to a couple, or maybe three contractors before you hire one and get the job started. Interview them individually to get a better feel of who you will be working with. Compare them on both professional levels and how you interact socially plus how they charge you for the job so you can pick a contractor with the most desirable traits for you.

Mix and match

Another way to save more money on the projects is to mic and match the materials. For instance, you can use hardwood floors in the living room, tiles in the kitchen and less expensive flooring options on the hallways, bathrooms and other areas. Vinyl and tile are less expensive but will make your house modern and beautiful.

DIY

Some home renovations do not need the work of a professional to come out looking nice. You can curb the labour costs by doing some of the work by yourself or with your family and friends.

Do not be afraid to get handy with the renovation process even when there is a professional around, you could learn a thing or two. This will also help you keep track of the finances used and make major decisions with the contractor.

Finally…

Other alternatives that will ensure a cheaper home renovation process include using reclaimed materials and holding a backyard sale to dish out all the items you do not need for some renovation cash.