Examining the Pros and Cons of Commercial Real Estate Investment

 Posted on December 00, 0000 in Commercial Real Estate

Commercial real estate investment is one of the biggest and most lucrative markets in America, but how do you know if it is the right option for you? First, you must determine if you have an interest in the market itself. Then, you must weigh the potential advantages and disadvantages to determine if you or your company may be a good candidate. Learn more about these pros and cons of commercial real estate investing with help from the following information, and discover how an experienced real estate attorney can help you get started off in the right direction.

Income Potential versus Financial Risk

One of the best reasons to start investing in commercial real estate is the earning potential. Whereas the annual return on residential properties typically ranges from only about 1 to 4 percent, commercial real estate has a return of about 6 to 12 percent. However, there are also some serious financial risks in the commercial real estate market. For example, commercial real estate properties typically require a much larger investment than residential properties.

Another factor to consider is the risk of litigation in commercial real estate. Typically, commercial properties have more visitors. If any of those visitors are injured, the investor may be held liable. Vandalism and damage to property (done by tenants, patrons, or vandals) are also important considerations in commercial real estate investment.

Finding a Tenant – Commercial versus Residential

All across the country, prospective residential tenants wait for the right home to pop up. Some may even spend weeks or months on a waiting list, just to find a place to live. In short, there is almost always another residential tenant that is just waiting for a property. In contrast, commercial real estate investment tenants can be few and far between. Knowing your market, your area and the local economy are all crucial to commercial investment success.

Complexity of Commercial Real Estate Investment

Residential investment can be a nuanced issue, but thousands of average people purchase residential properties each day – some without the aid of a professional. The same cannot be said of the commercial real estate property. In this investment market, legal counsel is not just recommended, it is practically required. Why? Because an attorney can ensure that due diligence is done. They can also reduce your risk of zoning or land use issues, and can even safeguard your investment by helping you create effective and well-planned agreements.

At Lindell & Tessitore, P.C., we strive to protect our clients’ financial futures and investments. Dedicated and experienced, we can assist with your commercial or residential real estate investment needs. To learn more, contact our Naperville real estate attorneys for a personalized consultation. Call 630-778-3818 today.

Source:

http://homeguides.sfgate.com/commercial-vs-residential-real-estate-investing-59968.html