That's the hot-button question if you're renting your business location.
People who buy commercial property are also often looking for some extra income. Whether you're looking for the perfect storefront or an apartment complex to generate some extra income, commercial real estate can be a solid investment.
Commercial real estate is potentially any real estate other than a single-family home. The term generally applies to office buildings, apartment complexes, retail properties, warehouses, educational buildings, and manufacturing facilities. Commercial real estate can already have a business on it, like a gas station or a restaurant. It can also be unused space, like a vacant lot or mini-mall.
Buying commercial real estate can be a good way to invest your money. Most people start buying commercial real estate for one of the following reasons: a specific business use, extra rental income, or to build equity.
Some people buy commercial real estate with a specific use in mind. They want to open a store, restaurant, or bar and need a place to put it. Buying the property can provide definite benefits over renting, including building equity (see below) and the ability to manage your commercial real estate space without restrictions from a property owner.
Earn extra rental income with commercial property
People who buy commercial property are also often looking for some extra income. Whether you're interested in buying a duplex, an apartment complex, or a mini-mall, renting out your commercial real estate space can be a great way to earn some extra money. In a growing market, where real estate prices are rising, someone else is helping you build equity. If you rent out half of your duplex, your renters are helping you pay your mortgage and build equity (see below). Be sure you understand all of the economics.
Equity is the value of the owner's share in a property. When you finance a large sale commercial real estate purchase, you're borrowing the money from the bank and slowly paying the bank back. With each dollar you pay back, that much of your equity is growing. Think of it as the ultimate piggy bank, where every dollar you put in gives you a little more of the property. And if your commercial real estate property appreciates, that single dollar can end up being worth more than a dollar. As the value of your commercial real estate property increases over time, so does your equity.