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Commercial Real Estate Investing & The Triple Net lease |
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Commercial
real estate investing is a type of real estate
investing which involves the purchase of real
estate property for use in commercial purposes.
Commercial real estate is typically defined as
real estate that encompasses more than one piece
of property.
Commercial real estate investing usually includes
the purchase of buildings or warehouses that a
company can do business in. With this type of
real estate investing, the tenant (company) will
pay the real estate investor (owner of the property)
a rental fee to do business in the building. |
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Commercial
real estate properties can include buildings or parts
of buildings like office suites, stores or clubs. Rental
properties, owning residential properties can also be
considered commercial real estate. Residential properties
that can be considered as commercial real estate are
things like apartment complexes.
Although apartment complexes are residential properties,
they are considered to be commercial real estate because
they are multi-tenant dwellings. Commercial real estate
investing that includes things like offices and warehouses
are great investments.
Office and warehouse investments are great commercial
investments because the tenants have triple net lease
that allow you to collect rent, while the tenant pays
for maintenance, insurance and taxes on the property.
A triple net lease will maximize your cash flow because
it decreases your expenses. Cash flow is the amount
of money the piece of real estate property generates
(from rent) and the expenses to keep the property maintained.
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With
investing, especially with investing in rental
property, you often have to pay taxes on the property
as well as pay for any type of maintenance the
property needs.
Investing in commercial real estate properties
like offices and warehouses will provide you a
regular income from rental payments while decreasing
your expenses.
Another type of commercial real estate investing
involves the purchase of retail centers. Retail
centers can include shopping centers, and malls.
Like office and warehouse real estate properties,
retail centers also offer triple net leases. |
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Because
retail centers offer long term triple net leases, your
rate of return will not go down as taxes and expenses
go up. As the rent goes up over time, your rate of return
will continue to get higher.
Commercial investing can also be used to invest in real
estate like hotels and resorts. This type of real estate
investing is better for experienced real estate investors.
A great way to get into commercial real estate investing
with hotels and resorts is to invest in the property,
then lease it out to another company.
When you lease out the hotel or resort property, the
company will then run the hotel. The reason for this
is that running a business is completely different from
real estate investing; and running a hotel or resort
is a business, not an investment.
Another type of real estate investing involves
land development. Land development is one of the most
exciting forms of commercial real estate. Land development
involves taking undeveloped land that is not yet ready
for building and improving its value. With land development,
it is best to start small and then work your way up
to larger land purchases.
Commercial real estate is all about the return on investment,
the deal and the terms. Investing in commercial real
estate is a great way to generate revenue. Since a lot
of commercial real estate properties have long-term
triple net leases, investing in commercial real estate
will increase your rate of return. With a long-term
triple net lease, you will not be faced with the number
of expenses that some other forms of commercial real
estate offer. |
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