Commercial Income Properties or Investment Properties: How Do They Differ?

Oct 19, 2015

In most fields of business or investments, there are various forms of diversification groups, and commercial income properties or investment properties are no exception.

When delving into the subgroups such as retail, office, warehouse, apartments, medical and student housing as examples, the real estate investor needs to be guided by pros that can explain the differences, particularly the possible pitfalls and behind the scenes advantages that each group may provide.

Westwood Net Lease Advisors have qualified brokers that have either owned millions of sq. ft.  of commercial property or helped sellers and buyers purchase them in the past.

You, as the investor, cannot expect each sub groups to run or act the same when owning these various commercial income properties or investment properties.

Basic Examples For Showing The Differences Between Commercial Income Properties And Investment Properties

Retail:  Can be single tenant triple net leases or double net leases, Multi-Tenant shopping centers, Life style centers, Power centers, Malls or Strip centers. Each has its own set of issues, whether good or bad in nature.

Prices range from 3 cap rates to 10 caps. Why? Because of the type of tenants, responsibilities of landlord, lease terms, credit worthiness of tenancy, location and loans to be negotiated.

Office:  Single tenant, multi-tenant, full service lease, triple net lease, free standing or in office park, Credit tenants, major city or tertiary location

Warehouse: Bulk, Distribution, Flex with rail or conditioned space, ceiling height, docks and drive- ins Near major ports or airports, right off highways, types of tenants, modified gross leases, triple nets, Floor thickness, column spacing

Apartments:  New or old, price per sq. ft. of rental, amenities, where in conjunction to other interests, storage, cable access, pools or clubhouses, age of residents, pet policy, small or large city location

Medical:  Proximity to hospitals, credit of tenants and length of leases, parking ratio of building to lot size, size of offices, labs

Student Housing: Proximity to University, is the school growing in student population, need for more housing, amenities offered by your housing verses others, price per month verses size of the unit, safety, factor, sound proofing, appliances and study areas

Westwood is aware of the various differences between the investment options and can differentiate between the issues and advise the investor and provide proper details to satisfy the concerns before moving forward.

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