Thinking of investing in commercial property? If so, you've picked the right time: by 2029, this U.S. market should be worth $28.16 trillion, according to Statista.
Despite that staggering number, these investments aren't risk-free. For starters, commercial property is a very broad term. Choosing the right type of property to invest in will require a lot of research.
Not sure where to start? Here are the main things you should know about commercial property investments in Tampa Bay, FL!
Why Invest in Commercial Properties?
First things first: why should you invest in commercial real estate? Some key benefits include:
- Generate stable and strong returns
- Capitalize on economic growth
- Diversify your portfolio
- Gain tax advantages
Of course, before you invest, you'll also need to consider the potential pitfalls. For example, commercial property tenants often have diverging needs. As a result, adapting a commercial property can involve high costs.
Types of Commercial Property Investments
Real estate investing can involve many types of properties. Here are some common examples and why they all require due diligence.
Retail Properties
Retail properties sell services and products directly to customers. Investing in them can create a stable income stream. However, this sector can be vulnerable to economic downturns and shifts in consumer behavior.
Multifamily Properties
A multifamily property is any property containing five or more units, such as an apartment building. These properties offer consistent income, but rent control in some markets may limit your returns.
Industrial Real Estate
This category involves properties used for logistics and manufacturing. They tend to come with longer lease terms and low turnover rates. This sector is less sensitive to economic fluctuations but comes with higher costs.
The Importance of Location
When it comes to real estate ROI, location is essential. No matter what type of property you own, its location will be key to its value and appeal. Before you invest in a property, consider its proximity to:
- Airports
- Public transport hubs
- Manufacturing hubs (for industrial properties)
Financing Options
There are plenty of options to finance your commercial property portfolio. Most investors opt to take out a loan with a fixed interest rate. That said, the approval process for these loans can be arduous.
For first-time investors, crowdfunding can be a solid alternative. This method involves pooling money from multiple investors. It offers greater flexibility and comes with less strict eligibility requirements.
Conducting a Market Analysis
The best way to determine property value is to conduct a thorough market analysis. Some key factors this analysis should cover include:
- Asset class
- Average tenant income
- Population growth trends
- Local economics
Let Us Manage Your Commercial Property!
As you can see, commercial property investments in Tampa Bay require a lot of effort. Beyond choosing the right property to invest in, you'll also need to manage it. For most investors, this will be a major time commitment.
At PMI Tampa Bay, we can help you with this part! We use state-of-the-art technology to offer a full suite of property management services. Contact us now to see why we made Entrepreneur's list of the best franchises in 2024!
