Commercial real estate (CRE) offers advantages residential investors can't match: longer leases, triple-net arrangements, and often better returns. Here's what beginners need to know.
Types of Commercial Properties
Retail: Strip malls, standalone stores, shopping centers. Success depends on tenant mix and location traffic.
Office: From medical offices to corporate buildings. Post-pandemic, medical and professional offices are more stable than general office space.
Industrial: Warehouses, distribution centers, flex space. E-commerce growth has made industrial the hottest CRE sector.
Multi-family (5+ units): Apartment buildings. Considered commercial financing despite being residential use.
CRE vs. Residential: Key Differences
- Valuation based on income (cap rates) not comparables
- Financing requires 25-35% down typically
- Due diligence is more complex (environmental, zoning)
- Tenant relationships are business-to-business
Interested in commercial investing? I help clients transition from residential to commercial. Call 647-784-7924.