Whether it’s new properties built on spec or older sites vacated by previous owners, there’s always a wide variety of commercial property available for purchase. And many of the prospective buyers are seeing them strictly as investments, intending to hold the properties and hoping they appreciate enough in value over time to offset any costs that might be incurred during the period of ownership.
Strategies for finding and purchasing commercial real estate for sale can vary quite a bit, as significant changes in the market occur with regularity every five to seven years. But over time, investing in real estate has proven to be a reliable way to make money.
Real estate investment firms find it to be a consistently profitable business for those who make wise decisions, with annual returns ranging from 6% to 12%. Banks will typically lend 60 to 70% of the property value on commercial real estate for sale, so a down payment of at least 30% is required.
A Class A commercial building in a large city’s downtown area is classified as one that’s 250,000 square feet or larger. In the suburbs, the size is less clearly defined, but in general 50,000 and up is considered to be Class A.
If a corporation wishes to function as a real estate investment trust (REIT), it has to pay out 90% of its taxable profits as dividends on a continuing basis.
As you might imagine, New York is the world’s leading city for property investment, with about 7% of the total $788 billion market (as of June 2014).
In the first months of 2015, there had been ten consecutive quarters in which prospective investors had expressed growing interest in finding commercial real estate for sale.
This, of course, is a specialized area for investment, and there are pitfalls to avoid. Fortunately, expert advice is available for companies or individuals on how to buy commercial real estate.