Maybe you’ve never invested in real estate before — or maybe you’ve had a few residential rentals for a while now. Either way, dipping your toes in the waters of a commercial property investment can seem terribly exciting for a change.
But is commercial property investment really a good idea for you? Here are some of the pros and cons to consider before you take that next step:
Zoning can be an issue
Commercial properties are highly regulated and buying a property that’s zoned for something other than your vision can be a serious problem. You can’t do anything with a property unless you have the permission of the city or state to do it.
The rental money is good
Commercial properties generally have more intrinsic value as rentals than residential properties. If you invest in the right commercial property, you may command a significantly higher rent than you could on a house.
The market can be fickle
The economic health of an area may wane and fall on a whim — and that can be difficult to cope with if you’re heavily invested in commercial property. Your fortunes are pretty well tied to the areas in which you have real estate.
You can sometimes sell for a fortune
If the area around your commercial property prospers, you may see an explosion in your property’s value virtually overnight. That allows many canny investors to flip their properties after 10 years for a mint.
The most important thing to remember if you’re starting to invest in commercial property is that you need to go into the situation with your eyes completely open. It’s always wise to discuss any plans for a commercial real estate transaction with an experienced attorney before you commit.