Real estate is renowned as one of the most reliable investments. California investors have a vast range of options to choose from. And most choose commercial real estate (CRE) due to its high-income potential and tax benefits. Additionally, investors can make money in numerous ways.
This guide discusses two of them:
Rental income
Investors with adequate capital can purchase commercial property and become the landlords of businesses. They will make money from rent. This is one of the reasons CRE has a high cash flow. If a property has many units and a low vacancy rate, an investor can have a high rental income.
A commercial property landlord can ask tenants to pay monthly rent or lease the units for lengthier periods. Investors should do market research to price their units correctly. Rent that’s higher than the market range can discourage tenants.
A landlord should also have a property manager to keep the property in good condition. Tenants may move out when a property is poorly maintained.
Appreciation
Appreciation is another way CRE investors make money. With this option, they wait for the property to increase in value and then sell it. They can sell an empty building or one that’s occupied. Of course, the latter may have higher profits.
Investors should be careful about the location they purchase property in, as some may take longer to appreciate. And when they do, the value difference may not be that high. Further, it helps to develop the property. Making improvements and maintaining a property can help one sell it.
You can make money in CRE through rental income, appreciation and indirect ways, such as owning commercial property-related stocks. It may be best to learn more about this industry to make the right moves.