Article - Consider commercial real estate investing

October 2010

A Real estate is often thought of as one of the safest possible types of investment. The recent slow down in the U.S. real estate market might make doubters of some of us, but the bigger trends have demonstrated that real estate is a solid and reliable investment for most of us.

Yes there will be losers; especially when things reach a feverish pitch as they did three or four years ago. In circumstances like that it is inevitable that there will be a correction. And when that happens people who were rushing in when prices were at their highest will be the biggest losers.

That being said, the history of the last 100 years has shown that investing in real estate will rarely bring overnight riches. But in the long run the return on real estate investments is solid and the profits are real.

Commercial Real Estate An Alternative

During good times and bad, most real estate talk is about the residential real estate investing. Investing in commercial real estate is something that most people know very little about and have very little interest in exploring. But the fact is, commercial real estate investing has some advantages you do not find in the residential side of things.

For most people the term "commercial real estate" conjures up visions of office towers, factories, and industrial units. But it is actually much broader than that. Anything property that can be used to house a commercial or corporate activity is a commercial property.

That includes such things as health care centers, retail structures and warehouse. It even includes churches and civic centers as well as residential properties like apartments or any residential property that consists of more than four distinct units.

so as you can see, the demand for commercial real estate is significant, and it never stops. As new housing developments get built there is an automatic need for retial centers, schools, churches, office buildings, shopping malls and the whole range of commercial properties we all expect to find in our communities.

Is Commercial Real Estate Profitable?

What the real estate investor wants to know is whether investing in commercial real estate is profitable. And as you can imagine, the answer to this is fairly obvious. Large financial institutions and major developers would not be building commercial projects if they were not profitable.

Just by virtue of the fact that the sums of money involved are greater it stands to reason that the potential for profit is greater with commercial properties than it is with residential ones.

But that doesn't mean it is an easy field to master. For one thing, commercial projects are much more complex than your typical home construction project. The financing for commercial projects is often more difficult to arrange. Getting the necessary governmental approvals can take years. And finding reliable contractors to actually build the project is fraught with risks.

On top of that, commercial developments can often sit empty or partially empty for several months or years after the project is completed. We've all seen developments that were built just at the end of the last boom only to sit empty while the economy recovers from one of those periodic slowdowns that always seem to happen.

But in spite of these risks, the general consensus is that commercial real estate offers more room for making serious money than does residential. Having said that, it is necessary for the investor
making the move to commercial real estate to pick his projects and partners with the utmost care.

Source: Rick Hendershot

Dy Associates is an Oakland Real Estate company specializing in commercial, home and investment property in the Oakland and East Bay Area. We provide real estate services including buyer agent, seller agent, short sales, commercial and investment aquisitions, loan facilitation, hard money lending, proerty management. Articles are provided as information only. We do not provide legal or general investment advice.