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Some More of the Pros and Cons of Investing in Commercial Real Estate

Posted on: April 5, 2017

In the past, we have discussed some of the benefits and disadvantages of investing in commercial real estate. Below are some additional pros and cons to consider as you plan out your next deal. If you have any questions on these areas or other aspects of commercial real estate investing, be sure to call Mark Schecter, a leading South Florida commercial real estate lawyer at (954) 779-7009.

Pro – More passive than residential in many cases

Many types of commercial real estate investments can be significantly more passive than residential real estate. For example, many businesses and offices run on limited hours, meaning that you shouldn’t get a call in the late evening about an emergency maintenance issue or other tenant problem.

With certain types of commercial real estate leases, such as triple-net, the tenant is typically responsible for a wide range of property expenses as well as maintenance, utilities and rent, and this lease is quite common.

This doesn’t always apply for commercial real estate purchases that involve residential units, but many other types of investments can be quite hands off once an appropriate management company is hired and the deal is finalized.

Pro – Flexible financing options

You can typically find a wider range of financing options in commercial real estate including the ability to purchase properties with private money, and up to 100 percent auxiliary financing can often be used. For residential mortgages, it can be difficult to obtain similar types of financing. These options allow investors to purchase properties with little to no money down using private money partners. It can also be easier to obtain multiple mortgages in commercial real estate.

Con – Property management is an extra expense and is risky

For most types of commercial real estate investments, property management is a necessary requirement, however it can be risky to trust a third party to manage your property. Choosing the right property management company is a critical step, and it is well worth your time to compare different companies and interview them extensively.

Find out about their experience with property management and capability for having the bandwidth to manage all of your properties. It’s also usually essential that you stay on top of your property management company to ensure that tenants are kept happy and that issues are promptly dealt with.

Call us today if you have any questions about commercial real estate

These are just a few of the benefits and disadvantages of commercial real estate, and if you have any specific questions on your situation, contact Mark Schecter, a top commercial real estate attorney in South Florida at (954) 779-7009.