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Properties with commercial leases offer many benefits

| Jan 31, 2019 | Commercial Leases

Based on traditional wisdom, investing in nonresidential properties across the United States, including in Los Angeles, is generally a good idea. Still, does this remain true for 2019 — specifically when it comes to investing in properties featuring commercial leases? Industry experts say that yes, commercial real estate investing is worthwhile this year for multiple reasons.

First, commercial properties always offer a return. As a result, it is not the same as shared ownership. With shared ownership, bad management decisions and undesirable market conditions can cause a rapid decline in share values. However, with commercial property investing, as long as investors are smart about their property purchases, they can continue to receive streams of income from rent and also have properties to sell as they wish.

Like anything else, however, commercial real estate does present some challenges. For instance, in certain markets, commercial rentals are declining as a result of market corrections. Also, a commercial real estate investment is usually capital intensive in addition to being hard to figure out if people do not know much about certain sectors. Nonetheless, the benefit of a commercial property investment is that its returns are generally higher than those of a residential property investment. A commercial real estate investor can receive a return of up to 12 percent a year, whereas the figure is 4 percent for a residential property investor.

In light of the many strong aspects of commercial real estate, this area appears to be a wise one to invest in this year. The challenge that many investors may face, however, is understanding how to complete these types of deals, which are very different from their residential counterparts. The good news is that an attorney can help investors to successfully navigate even the most complicated legal aspects of deals involving properties featuring commercial leases in Los Angeles.