When you hear the term investment property, do you picture an office or industrial building? Maybe you think first of retail space or an apartment building. If you are looking to diversify your investments to include real estate, it’s important to explore all of your investment property options. There are several types of properties to consider, each of which has different advantages for you to weigh.
Here’s our list of the different types of investment properties for you to consider:
Commercial Real Estate
Commercial real estate properties include office buildings, retail space, industrial and hotel buildings. Office space is a common type of property investors consider because business needs make office space an easier option to lease. Additionally, multi-year leases can provide a steady income stream for the investor. Your investment expenses will depend in part on which class of office space you purchase.
Three Classes of Office Space:
- Class A: These buildings provide premier office spaces asking for rents above average for the area. A prime location and state-of-the-art systems, as well as recently updated furnishings all combine to allow the investor to list spaces with premium rates.
- Class B: Buildings seeking a wide range of users with rents in the average range for the area. Building finishes are fair to good for the area and systems are adequate but lack high-end features.
- Class C: Buildings that include functional space at rents below the average for the area. (source)
Industrial Real Estate
Industrial investments include car washes, storage space rentals, warehouses and distribution centers. Industrial real estate investments are popular choices because there is often easy additional revenue stream options for the landlord.
A laundromat will provide revenue through the laundry machines but can also offer snack and soda machines for increased revenue. Adding coin-operated vacuum cleaners at a car wash increases the return on investment for the owner as do soap dispensing options. Another benefit is that many industrial properties require less yearly maintenance expenses than other commercial properties.
Retail spaces can be multi-tenanted or single-tenanted. An easy distinction to remember is that a shopping mall is multi-tenanted and a big box store falls into the single tenant category. Retail spaces often have leases for several years providing that steady income stream benefit we highlighted earlier.
Vacant land can be a great investment when located in the right place. The only typical expense for owning land is property tax until you build a structure. The profit margin for vacant land depends on finding the right buyer for the property as well as the time that elapses between purchase and sale.
When considering a long-term investment property, apartment buildings provide a steady stream of income to pay the mortgage. Once the mortgage is paid off, rental income minus taxes and maintenance costs all go to the property owner. Staggering the months that leases are up for renewal minimizes the times when you may have reduced revenue from vacant spaces.
With over 50 years of combined realty experience, Ullian Realty is ready to help you review all your investment property options and find the right option for you. It’s important to know the area when purchasing an investment property, and as community members along Florida’s Space Coast, our team understands the best investments for every individual’s goals. Contact us today to learn more about the Ullian Realty Process and to schedule your appointment to view investment properties.