Investing in commercial real estate is known to provide some of the highest income streams. If you've been investing in residential real estate for a few years and are wondering to invest in commercial real estate, understanding the types of Commercial Real Estate Investing is important for you to make the right investment decision for you.
5 Types of Commercial Real Estate
Before getting into the mechanics of investing in commercial real estate, it is important to understand the different types of commercial properties. Commercial properties serve a wide range of purposes, but are generally grouped into the following types:
· Office
The most common type of commercial real estate is office space. These buildings, which can range from single-tenant offices to skyscrapers, are defined by one of the following three categories: class A, class B or class C.
· Retail
Commercial buildings are another popular type of commercial real estate. These properties, which range from strip malls and community malls to banks and restaurants, are often located in urban areas.
· Industrial
From warehouses to large manufacturing sites, industrial buildings are generally geared towards manufacturing industries, as they offer spaces with height specifications and mooring availability. Also, these commercial properties are generally more suitable for investment opportunities.
· Multifamily
Multi-family buildings include apartment complexes, high-rise condominiums, and smaller multi-family units. A property is qualified as a multifamily building whenever it has more than one dwelling, but can also be considered as commercial property if it has more than four dwellings. Many residential investors are embarking on commercial properties by expanding into larger multi-family properties.
· Special Purpose
Special purpose properties are designed for a specific use including car washes, self-storage facilities, and schools. The leisure and tourism industries also account for a large part of special purpose real estate which includes hotels, airports and sports stadiums and amusement parks.
Bottom Line
Investing in Commercial Real Estate can be very beneficial for both personally and financially. For many, the objective of investing in commercial real estate is future wealth and security; others use it for tax benefits and diversification of the investment portfolio.