When your partnership or investment firm decides to dive into the commercial real estate market, it is essential to understand that not all types of commercial properties are strong investment prospects. Each individual property has its own unique advantages and challenges, but some kinds of commercial real estate generally make better targets for investors.
While the most common types of commercial investment properties include apartment buildings and other types of multi-family housing, there are other strong options as well.
Diverse housing options
Forbes provides detailed information on the different types of commercial real estate that are generally good for investors. For example, most types of housing are low-risk investments. Apartment buildings, low-maintenance senior housing and mobile home parks are all solid investment options under most circumstances.
Forbes recommends choosing properties that have well-established, efficient property management systems in place to avoid common problems such as issues with rent collection, property damage and unrealistic expectations from tenants.
Co-working spaces and other modern choices
Forbes states that self-storage complexes are also good investment options. They require low maintenance and generally have stable occupancy numbers. Another good possibility is a flex space. This term includes complexes that have a showroom and an office in each unit and are usually considered light industrial properties.
You may be able to find good investment opportunities in some modern building concepts. Good candidates may include co-working spaces and micro-apartments in up-and-coming urban areas.
High-risk commercial properties
According to Forbes, there are some types of commercial developments that are risky for investors. In general, a single-use building that only allows one tenant is risky; if the tenant leaves, it may be hard to find another one. Generally, properties with space for multiple tenants offer more stability in terms of occupancy and income.