Commercial real estate objects pay off faster than houses and apartments, and provide more revenue. But it is difficult to manage such assets as well. We found out what kind of real estate ownership is more profitable today – expert tips are here to help you!
Houses, hotels, shops
Houses, hotels, and shops bring guaranteed income. Positive dynamics of the real estate market, which quite easily survived the crisis and its consequences, suggests that apartments and houses are very profitable projects for investment.
An interesting proposition for investment in business is buy-to-let commercial and office real estate. This is a ready-made business: premises are already leased, contracts with major companies-tenants are signed, rental rates and lending rates for the future buyer are set. Banks are willing to lend to foreigners, who invest in business.
Renting commercial areas can bring profit that is higher in 2-3 times, than residential – even after paying the costs and tax charges. The profit from the apartments is about five percent per year.
In the time of crisis commercial areas bring their owners less than 7-8% per year. The profitability of retail space is 9%, warehouses – approximately 10%. Payback period is about 10 years. And apartment pays off approximately 18 years.
The greatest importance when selecting office premises lies in location and accessibility. The price will depend on these factors.
Possession of warehouses brings the greatest benefit- this is a very stable business. But it is specific as well. Private persons buy warehouse real estate quite rare. And it is more complicated to manage such locations: the number of potential tenants for such premises is smaller than for offices and retail.
Street retail space
The most stable and predictable kind of commercial premises is a street retail space. The profitability of such premises is at the level of 9-11%. And most profitable investments are those made in leased areas up to 300 squares meters.
Commercial real estate overtakes houses and apartments, and the more expensive it is, the more money it brings. Not everyone can afford to purchase premises for renting it to jewelry shop on the main street of a big city. The second conclusion — if there is a great desire to become “a commercial investor”, you should pay attention to new apartments.