The general media and financial institutions usually believe that stocks, bonds, and mutual funds are the best and only way to wealth and retirement. American real estate executive Adam Hochfelder truly believes real estate is an overlooked asset for many investors. He is also convinced that commercial real estate is one of the best ways to build wealth.
Commercial real estate is all around us, and includes apartments, offices, retail space, and more. While investing in commercial real estate normally requires more capital, expertise and time than the everyday investor has, there are ways for individuals to have a diversified portfolio of commercial real estate. If you’re wondering how to invest in commercial real estate, here Adam Hochfelder will explain the importance of conducting due diligence, including performing market research before investing, as well as the many benefits associated with commercial real estate investment.
Investing in commercial real estate can be very rewarding, both personally and financially. As an integral part of an investors’ portfolio, commercial real estate offers an abundance of benefits for investors. In fact, investing in commercial real estate can generate significant revenue or sale profits. Income and appreciation are the two ways commercial real estate earns money. Income is produced through the operation of the building, while appreciation is an increase in the property’s value over time.
Commercial real estate investing involves a wide array of math, as well as an understanding of real estate finance. To be a player in commercial real estate, there are several formulas you should know. The value of commercial real estate is derived by the larger growth of the economy as a whole.
Unlike with residential homes, income from commercial real estate is directly related to usable square footage and, therefore, investors will generally earn more income on multi-family dwellings. That said, commercial property leases are longer than residential leases and will pave the way for greater cash flow.
Real estate location is another important feature for investors to consider. If the location of the property is not in demand, more than likely finding tenants will be difficult and result in vacancies. Beginner investors should also examine the neighborhood a potential commercial property is located in.
