An overview of investing in commercial real estate

On Behalf of | Jul 6, 2020 | Real Estate |

Investing in commercial real estate may be an effective way for a person to create a steady source of income. There are several different types of properties that commercial investors in Mississippi and throughout the country can choose to purchase or develop. Those properties include office buildings, retail space and multifamily properties that can be located either in suburban or downtown locations.

Office buildings are divided into three classes depending on the condition and location of the properties. The most attractive buildings tend to be those that have just been constructed and are located near highways or other main access points. This is because such properties will likely cost less to maintain and will have lower vacancy rates. Retail properties such as banks, restaurants and strip malls tend to be located in downtown or other urban parts of a city.

A multifamily property is defined as any residential building that has more than one unit. Typically, apartment complexes and condominiums will qualify as multifamily residential properties if they have more than four units. While it may be easier to purchase this type of property, investors should keep in mind that residential leases are typically shorter than a traditional commercial lease. Therefore, property owners should be ready for higher rates of tenant turnover and account for that in their business plans.

A person who wants to acquire a commercial property may want to review a purchase contract with a real estate law professional before it goes into effect. This may help a buyer better understand the financing and other terms that are included in such a document. A real estate legal professional may also make changes to a proposed contract or take other steps to protect a buyer’s legal rights before and after a purchase deal is finalized.