Anyone looking to get into real estate investing must understand Commercial Real Estate for what it is: buying and selling property. To this end, you have to familiarize yourself with all manner of knowledge on the topic, including rather “boring” subjects such as classifications and zoning restrictions.
Knowledge such as this covers all aspects of property ownership and management, even of types, you have no intention of being involved in. A well-rounded education of real estate investment should involve knowledge of all aspects of real estate.
There are three basic types of real estate property — residential, commercial, and industrial. Each has its own types of zoning restrictions, but most properties within highly-populated areas will fall either under commercial or residential classifications. Here, the focus will be placed on commercial real estate (CRE) properties.
This kind of property is considered “any property owned with the intent to produce income”. A couple of examples of this include convenience stores, office buildings, malls, restaurants, movie theaters, gas stations, hotels, and other familiar buildings you would recognize during a stroll down the street.
Amongst these, CRE properties can be further divided into many different subcategories. Here, we will cover the most common subcategories.
Retail and Restaurant Properties
These properties can be standalone buildings or part of a larger structure that house and incorporate multiple businesses all cooperating within it, akin to a strip mall or office building.
Buildings that house multiple different businesses and tenants are attractive prospects for real estate investors, as multiple occupants involve less risk and many times more potential profit. These kinds of properties include strip malls, power centers, retail centers, regional malls, and office buildings.
Office Properties
Office properties that are classified as CREs can be small buildings, or they can be skyscrapers filled with multiple offices. They are often categorized as category A, B, or C.
Class A properties: The most attractive offices to real estate investors. They are often new, but not necessarily. They are usually in ideal locations and are professionally managed.
Class B Properties: Class B properties are recognized by investors as having a high Return On Investment (ROI). Often older than Class A, but can be renovated, improved, and modified. Although well-taken care of, their infrastructure often requires some investment.
Class C Properties: Likely the oldest type of office, these properties are often in bad locations and need major renovations to their infrastructure. They remain vacant for long periods of time and have lower occupancies due to lower-quality infrastructure.
Multi-Family Units
This might surprise some, but any apartment building that is the size of a fourplex or bigger can be considered CRE property during an investment, rather than a residential property.
This means that apartment buildings, extensive complexes, smaller multi-family buildings, and condos are considered CRE. Typically, you’ll find less long-term stability with these properties but is, of course, always in demand. In addition, it offers high returns. Everyone knows that rent is due at the end of every month, after all.
Conclusion
Education about real estate is an essential step in becoming a real estate investor yourself. You’ll need a well-rounded and throughout understanding of real estate properties and what it takes to invest in them, and the help and guidance of experienced investors — investors like Steven Taylor LA.
When in doubt, reaching out to these experts for further guidance on Los Angeles real estate and support will set you back on the right path should you ever lose your way.