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Commercial real estate refers to the property that is used for conducting business transactions and for office work. The range of commercial properties is expansive including everything from gas stations to industrial hubs, shopping centers to departmental stores.
What sets commercial real estate apart from residential properties is the method of rent payment. The lease amount is paid annually based on the amount of space occupied (calculated in square feet) instead of monthly payments. Generally, an investor buys a whole plot of land or a building and leases it out to different commercial operations.
Lease Types
There are basically four types of leases which differ on the basis of the agreement between the landlord and tenant regarding responsibilities.
– Single net lease- The tenant pays the property tax.
– Double net lease- Tenant pays property tax and insurance.
– Triple net lease- Tenant pays property tax, insurance and maintenance.
– Gross lease- Tenant pays rent and the landlord pays the tax, maintenance and insurance.
Categories of commercial properties
There are mainly three different classes of commercial properties:
Class A- This is the top category in which those constructions are included which are relatively new, well-maintained, strategically located and have a solid structure.
Class B- Buildings in this category are older. Investors generally look for these buildings to restore them and make them usable once again. They make a greater profit because investment is not so high and after renovation, it can become as good as new.
Class C- The location of these buildings is not very attractive and the structure itself is more than 20 years old. It requires a lot of maintenance.
Investing in Commercial Real Estate
Commercial investments are high-risk because of the uncertainty of getting returns in terms of regular rent. It is always a good idea to find a location where the demand is high and vacancy is low. Such an investment guarantees continuous occupation of property and inflow of rent.
The property should be located in an area where the local economy is strong and there are chances of development. This ensures greater appreciation in the value of the property with the passage of time.
Commercial real estate agents should be consulted to get a clear idea as to the current property prices, market scenario, legal procedures, correct time to buy a commercial property and the best properties for available for sale.
It has been predicted that this year the retail market will continue its momentum in terms of e-commerce sales and office spaces will become more flexible and smart.
In Connecticut, Connecticut Real Estate is the best choice for commercial real estate brokerage services.
Steve Schappert is a Connecticut’s Real Estate Buying Pro. Schappert is a buyer’s agent, a nationally recognized exclusive Connecticut Real Estate Broker and an award-winning Connecticut Home Improvement Contractor. Schappert is uniquely qualified to help you locate, negotiate and renovate your dream home or investment property.
“A Buyer’s agent represents the interests of the buyer in a real estate transaction. The Buyer’s agent’s responsibilities to the buyer are: undivided loyalty, obedience, diligence, disclosure, confidentiality, accounting, and reasonable skill and care. All duties are fiduciary — they are owed exclusively to the buyer – NOT to the seller.” – CT Dept. of Consumer Protection
A buyer’s agent can work for a traditional agency which can put you at risk. Traditional agencies take listings and promise to get the top price for the seller. If you don’t work with an exclusive Connecticut Real Estate Brokerage that Never takes listings, you will likely end up signing a dual agency agreement.
Hiring Connecticut Real Estate is the best decision you will make regarding buying real estate in Connecticut. When NBC, Kiplinger’s Financial, Woman’s Day Magazine, The New York Times, Real Estate For Dummies & The Learning Channel (TLC) wanted to learn more about buying real estate, they called Steve Schappert and you should too!
Call Steve Schappert Today to Start The Connecticut Real Estate Investment Process
860-740-2811 Email Broker@CTRE.Online
Benefits of buying commercial property
Are you on the brink of taking an office space on lease? Think again. For those who want to save money and increase their cash flow in the initial days of business, leasing may be a better option. But for those entrepreneurs who have substantial financial resources and want to enjoy the tax benefits which come with property ownership, buying a commercial property is the perfect solution. Here are its top advantages:
- Greater Value Appreciation
It has been observed that commercial properties have a greater appreciation in value than any other type of investment. There are internal as well as external factors which contribute to such appreciation. Internal factors include effective management of the company and increase in functionality of property through cost effective renovations. The demand and supply imbalance works as an external factor.
- Regular Source of Rental Income
Commercial real estate is the biggest asset a company can have. The extra space can be leased out to other commercial enterprises. This ensures constant cash inflow. Yields from leasing a commercial property are much higher than dividends from stocks.
- Protection against inflationary forces
Generally, when there is an inflationary trend in the market, commercial property investors get the maximum benefit. The reason is that the rate of inflation and the rate of appreciation of commercial property prices are correlated to each other. As one increases, the other experiences an upward trend as well. This is in case of those properties which have high replacement and labor costs associated with them.
- Secure investment
A significant advantage of owning a commercial property is that it is a very secure investment. This means that the owner can always earn income from the property because there is a high demand for rented commercial space. This is a tangible asset which has a good intrinsic value. The owner can take a loan several times the equity of the commercial property to purchase more assets and then pay the original loan with the profit from the new investments.
- Tax benefits
There are several tax benefits associated with commercial real estate purchase. The most significant ones are the tax exemption for mortgage payments and depreciation deductions. A major part of the income can be saved with the help of these tax code benefits.
These are just a few reasons why you should consider buying a commercial property instead of leasing it.
For expert guidance in commercial property purchase in Connecticut, contact Connecticut Real Estate & Investment