Commercial vs. Residential Real Estate
So, you want to invest in real estate. Before you put your money out there, you want to make sure that you know exactly what it is that you’re investing in. The first thing that you need to understand is that there are two main types of real estate for you to purchase.
Here’s a breakdown of commercial vs. residential real estate.
Residential Real Estate
If the property you’re interested in buying is going to be used for occupation for a non-business reason, it’s probably a residential property. It can include townhouses, multi-family houses, cooperatives, condos – even if it is more than one unit, it can still be considered residential. As long as it’s less than five units or if it’s not temporary living spaces like a campground or hotel, it’s probably going to be considered residential.
Commercial Real Estate
Commercial real estate, then, is a property that is owned so that you can produce an income. So, this means it can be anything – a gas station, a daycare center, an ice cream stand, or an apartment building. It’s also important to know that there are six categories of commercial real estate, including one catch-all category.
*Office Properties – If it’s a commercial real estate office property, it includes “single-tenant buildings, small professional buildings, skyscrapers, and everything in between.”
*Retail/Restaurant – these can be freestanding or included in a strip mall or other retail center.
*Industrial – some industrial spaces are more likely to be ‘investment-worthy’ and some are less likely. If it’s a heavy manufacturing industry, it’s pretty specialized and can’t be turned into something else easily, so it’s probably not as great of an investment opportunity. Light assembly industries are a better bet because they are “more easily reconfigured.”
*Multi-family – any apartment that is a fourplex or bigger is commercial real estate.
*Land – if there is land that can be turned into a developed property, such as on the edges of a city, this would be considered a commercial real estate property.
*Anything Else – anything else that you can think of that can make money would be considered commercial real estate – and that includes beauty salons, daycare centers, music studios, or a tattoo parlor. If you can think of it and if you want to invest money into it, you can definitely become a commercial real estate investor.
Finding a Lucrative Real Estate Market
When you’re thinking of investing in real estate, you’ll want to look for a hot market. Forbes.com lists the hottest real estate markets for investors in 2016, and Nashville comes in close to the top at 7th in the nation. If you’re looking to invest in commercial real estate, Nashville is definitely a great place to look! But if you’re a novice to the commercial real estate investment business, you’ll want to get some help. There are experts out there who can help you find the right investment property and who can look after any aspect of the business that you need assistance with.