The 3 main types of commercial real estate investment properties

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Information about The 3 main types of commercial real estate investment properties
Real Estate

Published on April 2, 2014

Author: WestwoodNetLease

Source: slideshare.net

Description

Thinking of getting started in real estate commercial investment properties?
Use this handy guide to help you decide which commercial income property suits you best. HINT: It doesn't depend on how much money you have to spend.

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1 Value Added Investments The 3 Main Types of Commercial Real Estate Investment Properties These investments are great for investors who enjoy prospecting commercial real estate property that needs improvements and tenant repositioning to yield the maximum return. Here are five ways in which owners of value added investments reap profitable returns. • Fix up a partially vacant or fully vacant property and re-lease the property at a higher rate. • Reposition triple net lease tenants in a shopping center to allow additional tenants to occupy space in the center for higher rent than current tenants pay. (con'td on next slide)

1 Value Added Investments-cont'd. The 3 Main Types of Commercial Real Estate Investment Properties • Give the parking lot and/or facade of a retail triple net shopping center a facelift and subsequently increase rent rates. • Buy out triple net leases that are set at low rent rates and replace old tenants with new tenants that pay higher rent. • To help increase sales, add new signage and/or cut down trees to give consumers a better view of the retail area.

2 Single Tenant Triple Net Investments When Is a Good Time to Sell a Triple Net Lease Property? These investments typically involve property that an investment grade tenant occupies for a long period of time. Consequently, they are an excellent opportunity for investors who need a secure stream of income. Here's why: • The triple net lease transfers taxes, insurance, and maintenance to the tenant, leaving the property owner with no traditional landlord responsibilities. • With no landlord responsibilities, the property owner can move to a different area without becoming disadvantaged as the owner.

2 Single Tenant Triple Net Investments -cont'd When Is a Good Time to Sell a Triple Net Lease Property? • 10 to 25 year lease structures are common and allow the property owner to plan personal finances and other investments well ahead of time. • Percentage annual rent increases are a common stipulation of the lease and help the property owner maintain profits despite inflation. • The property is typically positioned in a prime location, which makes it easy for the owner to find a new tenant if the current one doesn’t renew the lease.

2 Multi Tenant Strip Centers When Is a Good Time to Sell a Triple Net Lease Property? These real estate commercial income properties can be major income producers for investors who have the tenacity and investment capital to take them on. Below are five aspects of owning a multi tenant strip center that can make it a valuable addition to your commercial real estate property portfolio. • A center that has diverse retail tenants draws in a variety of demographics that synergize to increase the financial well being of all tenants. • When one tenant is not doing so well, the success of other tenants helps pick up the slack and cushions the effect of the tenant’s lagging sales.

2 Multi Tenant Strip Centers -cont'd. When Is a Good Time to Sell a Triple Net Lease Property? • With several tenants supporting the retail center and your net income, there is less chance of becoming financially burdened with ownership. • Normal rent increases are typically built into the lease for triple net tenants in a strip center and help the investor profit despite inflation. • The landlord commonly maintains the roof and structure, but triple net leases transfer taxes, insurance, and common area maintenance to tenants.

Questions? HOW TO DECIDE WHETHER OR NOT A COMMERCIAL PROPERTY IS PROFITABLE Still not sure what type of real estate commerc ial properties are best for you? Contact an experienced real estate broker at Westwood NetLease Advisors. You'll get a free 3o minute consultation, and solid advice on how to get started investing in your income property. Call us to schedule your free consultation at 314-757- 1031, or send an email to: jgitt@westwoodnetlease.com

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