Apartment Buildings – The Safe Way Into Commercial Real Estate Investing

As a long-term investment, real estate is difficult to beat. Most people only know about residential real estate investing, buy a house or unit and rent it out. A lot of people think that commercial real estate investing is only for professionals with lots of money. Of course it helps a lot if you have plenty of money or if you have been dealing with commercial real estate for many years. But it is far from impossible for beginners with limited money to get started in commercial real estate.

Commercial property covers a wide range of buildings, the most common types are retail, hotels, apartment buildings, warehouses, industrial buildings and office buildings. The money required to buy commercial property starts from just a few thousand dollars for a small shop in a poor location up to hundreds of millions, or more, for huge buildings in prime locations.

A lot of people think that they will never be able to borrow the money needed to close a commercial deal. But this is seldom a problem. In commercial real estate, lending is based on the deal. If the deal is good, it is generally not a problem to get the money needed to close the deal. If the deal is not good, you will have trouble finding the money but this is not really a problem.

So what kind of commercial property is easiest to start with? Investing in apartment buildings is an easy way of getting started in commercial real estate. Recession or not, people always need to live somewhere. Also, since you have a lot of tenants, your cash flow is reasonably safe. It is unlikely that 50 tenants will move out the next week. If you have an office building with just one or two tenants, your cash flow will take a heavy hit if one tenant leaves. Note that you do not manage the units yourself, you outsource that job to a company specializing in property management. Since all your units are in one single location, the property can be managed much cheaper than if your properties are spread out all over the town.

Leave a Reply