For many people, the decision to invest in commercial or residential real estate is a financial one. Commercial real estate usually requires a much larger initial investment. Yet, there are many investors who can afford to make the jump into commercial real estate, and don’t.
Commercial real estate is unfamiliar. Most people make their first big investment when they buy their first home, but they have no experience in the commercial real estate market. Taking that first step into the unknown can be daunting, which is why talking to a commercial Realtor® about your options is a great place to start.
Here are a few reasons why commercial properties can make great investments:
Most investors will gain more income per square foot on a commercial property than a residential one.
You buy a house. You have a tenant. The tenant leaves and you have trouble replacing him/her. As long as the house is vacant, you are losing 100% of the income you can make from that property. You buy an apartment building. You have twenty tenants. With one vacant apartment, you’re losing only 10% of the income that property can generate.
Generally, you can expect a business that is occupying your commercial property to sign a much longer lease than a residential tenant, giving you a more secure investment. It is common for retailers, for example, to sign 5-10 year lease agreements.
Different lease types
When you invest in residential property, your tenants are under no obligation to buy insurance to protect their belongings or any damage they may cause to the home. Depending on the lease agreement, commercial tenants may be required to pay for insurance, and even cover maintenance and operating costs.
If you buy 10 residential investment properties, you’ll be doing a lot of running around managing all of those tenants. It would be much easier to buy one commercial location with multiple tenants in the same property.
Expert help is available
We have very talented commercial Realtors® at Team Powerhouse Realty who can give you an insight into the commercial opportunities in Prince George, BC and surrounding areas. We’d love to talk.